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The Pragmatist

Sunday, December 14, 2008

By Christopher Hayes
The Nation

In case you haven't heard, Barack Obama is a pragmatist. Everybody agrees on this. Joe Biden, accepting Obama's nod as VP at his unveiling event in Springfield, Illinois, called him a "clear-eyed pragmatist." Describing Obama's rise through Chicago politics, the New York Times stressed his "pragmatic politics," while the Washington Post's David Ignatius refers to "The Pragmatic Obama," and one of Obama's most trusted confidantes, Valerie Jarrett, told USA Today, soon after his election-day victory, "I'm not sure people understand how pragmatic he is. He's a pragmatist. He really wants to get things done."

Obama is clear on this point as well, touting his national security team as "shar[ing] my pragmatism about the use of power" and telling Steve Kroft during his recent 60 Minutes interview that when it comes to economic policy, he doesn't want to "get bottled up in a lot of ideology and 'Is this conservative or liberal?' My interest is finding something that works."

Fair enough. We get it. He's a pragmatist. But just what does that mean? It can't simply be that he's comfortable with compromise, willing to maneuver in the world as it is. That goes without saying. The man was just elected president of the United States. Head-in-the-clouds idealists do not, as a rule, come to control the American nuclear arsenal....(Click for remainder).

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Powell on Fareed Zakaria - What's Wrong With Republicans

Powell Slams “Polarizing” Palin, Says GOP Should Stop Listening To Rush Limbaugh

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Pound slips below euro on Britain's high streets

By Toby Helm and Paul Gallagher
The Observer

The government is facing a growing backlash over its rescue package for the economy after the pound slumped to below parity with the euro on British high streets and at airports for the first time since the single European currency was launched a decade ago.

Sterling's decline to a value of less than a euro, after commission charges, is seen by economists and opposition politicians as a pivotal 'psychological moment' - and evidence of declining faith in the British economy on global currency markets.

Last night, as skiing operators and other holiday companies across the UK reported customers shunning expensive trips in favour of cut-price deals, Currency Exchange on London's Oxford Street was selling euros for as little as €1.0532 to the pound. After commission and a handling fee, however, €18 cost The Observer £19.61, an exchange rate of €0.918 to the pound.

Tourists at Birmingham, Liverpool and Luton airports were also getting less than €1 to the pound after sterling tumbled in value every day last week.

Customers changing £200 at Birmingham and Liverpool were last night receiving just €197.13 from Travelex counters, while those at the ICE bureau de change at Luton took away €199.63 - an exchange rate of €0.986 to the pound at Birmingham and Liverpool and €0.998 at Luton.

Tories and Liberal Democrats laid the blame for the pound's collapse firmly at the door of Gordon Brown. Philip Hammond, shadow Chief Secretary to the Treasury, said the Prime Minister's decision in the pre-Budget report to let borrowing soar to fund £20bn of tax cuts had severely damaged - rather than boosted - economic confidence and people's willingness to spend.(Click for remainder).

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Lindsey Graham tries again to ruin unit morale and cohesion in Aghanistan

By John Aravosis
America Blog

I worked on the gays in the military issue back in 1993. I was helping a good friend in Senator Kennedy's office prepare for the horrible hearings that Sam Nunn held to "prove" how dangerous even the whiff of gays would be in the US military. The main argument from the anti-gay forces, in a nutshell, is that if other guys in the military know you're gay, then they may not like you, want to work with you, will worry that they may need to keep their eye on you (or off you) while in the shower, will worry that you'll try to cop a feel while they're sleeping in the close together bunks in submarines, etc. Seriously, those were the arguments.

And the same arguments apply to someone you may not "know" is gay, but someone you strongly suspect of being gay. I.e., if you're a homophobe, worrying about gay guys copping a feel in the shower, you're going to be just as worried about the guy who doesn't tell you he's gay, but about whom your gaydar goes off the scale.

That brings us to Republican Senator Lindsey Graham, who likes to go over to the Middle East and play soldier. Now, I don't know if the unmarried Senator Graham is straight or gay. I do know that, as a gay man myself, Lindsey Graham makes me look straight. If someone put a gun to my head and made me guess whether Graham was straight or gay, I wouldn't hesitate to venture that he's a flaming homosexual because he looks and sounds like a flaming homosexual. And I've rarely met a straight man who flames, and then turns out to be actually straight....(Click for remainder).

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Jared Polis's Inauspicious Start

WTF? I thought that this guy would be decent. Appears he's nothing more than a corporate Republican in Democrats clothing. He needs to remember that he represents the People's Republic of Boulder and this kind of talk will get his ass booted in 2 years.

By DavidNYC
Daily KOS

This is the time of year when I start to get excited about what sort of ideas and personalities newly-elected legislators will soon bring to Congress. One rising freshman, however - Colorado's Jared Polis - is already off to a rocky start. ColoradPols informs us that Polis has written an op-ed in, of all places, the Wall Street Journal, purporting to give advice to his soon-to-be colleagues about the auto industry bailout.

Consider for a moment the optics of this sort of move: Polis, elected to represent a liberal district (D+8), is taking to the pages of the most conservative major paper in America to tell Congress (made up mostly of Democrats) what it ought to be doing before he's even sworn in. Now, you might reasonably ask why that's so bad - after all, isn't Polis allowed to share his ideas?

Of course he is. But I think his approach is more than a little presumptuous. What's more, his "solution," such as it is, could have been dreamed up by John Boehner: cut capital gains taxes! And he doesn't limit himself to cutting taxes to save the auto industry - he thinks they could be the panacea for the entire economy.

But really, I'm not here to debate Polis on the merits (misguided as he is). The real problem is the dripping contempt he evinces for Congress. This is no way for a new member to win friends and influence. Apparently misunderstanding the nature of representative government, he all but says that members of Congress have no business getting involved in anything having to do with, well, business:
Our United States Congress of lawyers, doctors, diplomats, retired military officers and career politicians -- along with their staffs of intelligent young political science majors and MBAs -- now finds itself poring over "business plans" submitted this week by Ford, GM and Chrysler. People who have never before in their lives seen -- no less implemented -- a business plan are now trying to decide if these companies will succeed by means of a "capital infusion" with various imposed preconditions and negotiate what we taxpayers (investors) should be getting for our money. Something is wrong with this picture.
To my ears, this sounds a lot like Republican claims that people who haven't served in the military aren't fit to hold opinions about Iraq. (Many will recall that this was a very common line of attack on liberals in 2002-03.) Polis seems to think that sophisticated, knowledgeable businesspeople won't exist in Washington, DC until he gets there on Jan. 6th....(Click for remainder).

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After 15 Years, North Carolina Plant Unionizes

While the Billy Bob Rape-ublicans attempt to kill of unions, this is happening in their own backyard.


Sangjib Min/Daily Press, via Associated Press
Workers demonstrating against Smithfield Foods in August 2007 during a shareholders’ meeting in Williamsburg, Va.

By Steven Greenhouse
The New York Times

After an expensive and emotional 15-year organizing battle, workers at the world’s largest hog-killing plant, the Smithfield Packing slaughterhouse in Tar Heel, N.C., have voted to unionize.

The United Food and Commercial Workers, which had lost unionization elections at the 5,000-worker plant in 1994 and 1997, announced late Thursday that it had finally won. The victory was significant in a region known for hostility toward organized labor.

The vote was one of the biggest private-sector union successes in years, and officials from the United Food and Commercial Workers said it was the largest in that union’s history.

The union won by 2,041 votes to 1,879 after two years of turmoil at the plant. As a result of a federal crackdown on illegal immigrants, more than 1,500 Hispanic workers have left the plant. Its work force is now 60 percent black, up from around 20 percent two years ago.

After the results were announced, Wanda Blue, a hog counter, was among the many workers who were celebrating.

“It feels great,” said Ms. Blue, who makes $11.90 an hour and has worked at Smithfield for five years. “It’s like how Obama felt when he won. We made history.”...(Click for remainder)

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Thom Hartmann discusses the UAW and the GOP on Countdown

Thom Hartmann appeared on Countdown Friday evening to discuss the GOP's desire to kill off the unions.  Later in the segment, when asked what he thought Barack Obama should do to enliven the manufacturing base in the US, Hartmann suggested Alexander Hamilton's report to Congress (the full report is found below the video).


Alexander Hamilton

REPORT ON MANUFACTURES

DECEMBER 5, 1791

 

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Scanned January, 2001 from primarysources.

Contact kleind@union.edu with question, comments,corrections.

    

Communicatedto the House of Representatives, December 5, 1791

 

[To the Speaker of the House ofRepresentatives:]

     The Secretary of the Treasury in obedienceto the order of the House of Representatives, of the 15th day of January 1790,has applied his attention, at as early a period as his other duties wouldpermit, to the subject of Manufactures; and particularly to the means ofpromoting such as will tend to render the United States, independent on foreignnations, for military and other essential supplies. And he thereuponrespectfully submits the following Report:

 

     The expediency of encouraging manufacturesin the United States, which was not long since deemed very questionable,appears at this time to be pretty generally admitted. The embarrassments, whichhave obstructed the progress of our external trade, {193} have led to seriousreflections on the necessity of enlarging the sphere of our domestic commerce:the restrictive regulations, which in foreign markets abridge the vent of theincreasing surplus of our Agricultural produce, serve to beget an earnestdesire, that a more extensive demand for that surplus may be created at home:And the complete success, which has rewarded manufacturing enterprise, in somevaluable branches, conspiring with the promising symptoms, which attend someless mature essays, in others, justify a hope, that the obstacles to the growthof this species of industry are less formidable than they were (972) apprehendedto be; and that it is not difficult to find, in its further extension; a fullindemnification for any external disadvantages, which are or may beexperienced, as well as an accession of resources, favourable to nationalindependence and safety.

     There still are, nevertheless, respectablepatrons of opinions, unfriendly to the encouragement of manufactures. Thefollowing are, substantially, the arguments, by which these opinions aredefended.

     “In every country (say those who entertainthem) Agriculture is the most beneficial and productive object of human industry. This position, generally, ifnot universally true, applies with peculiar emphasis to the United States, onaccount of their immense tracts of fertile territory, uninhabited andunimproved. Nothing can afford so [279]  advantageous anemployment for capital and labour, as the conversion of this extensive wildernessinto cultivated farms. Nothing equally with this, can contribute to thepopulation, strength and real riches of the country."

     "To endeavor by the extraordinarypatronage of Government, to accelerate the growth of manufactures, is in fact,to endeavor, by force and art, to transfer the natural current of industry,from a more, to a less beneficial channel. Whatever has such a tendency mustnecessarily be unwise. Indeed it can hardly ever be wise in a government, toattempt to give a direction to the industry of its citizens. This under thequick-sighted guidance of private interest, will, if left to itself, infalliblyfind its own way to the most profitable employment; and it is by {194} suchemployment, that the public prosperity will be most effectually promoted. Toleave industry to itself, therefore, is, in almost every case, the soundest aswell as the simplest policy.”

     “This policy is not only recommended tothe United States, by considerations which affect all nations, it is, in amanner, dictated to them by the imperious force of a very peculiar situation.The smallness of their population compared with their territory -- the constantallurements to emigration from the settled to the unsettled parts of thecountry -- the facility, with which the less independent condition of anartisan can be exchanged for the more independent condition of a farmer, theseand similar causes conspire to produce, and for a length of time must continueto occasion, a scarcity of hands for manufacturing occupation, and dearness oflabor generally. To these disadvantages for the prosecution of manufactures, adeficiency of pecuniary capital being added, the prospect of a successfulcompetition with the manufactures of Europe must be regarded as little lessthan desperate. Extensive manufactures can only be the offspring of aredundant, at least of a full population. Till the latter shall characterisethe situation of this country, 'tis vain to hope for the former.”

     “If contrary to the natural course ofthings, an unseasonable and premature spring can be given to certain fabrics,by heavy duties, prohibitions, bounties, or by other forced expedients; thiswill only be to sacrifice the interests of the community (973) to thoseof particular classes. Besides the misdirection of labour, a virtual monopolywill be given to the persons employed on such fabrics; and an enhancement ofprice, the inevitable consequence of every monopoly, must be defrayed at theexpence of the other parts of the society. It is far preferable, that thosepersons should be engaged in the cultivation of the earth, and that we shouldprocure, in exchange for its productions, the commodities, with whichforeigners are able to supply us in greater perfection, and upon betterterms.”  [280]

     This mode of reasoning is founded uponfacts and principles, which have certainly respectable pretensions. If it hadgoverned the conduct of nations, more generally than it has done, there {195}is room to suppose, that it might have carried them faster to prosperity andgreatness, than they have attained, by the pursuit of maxims too widelyopposite. Most general theories, however, admit of numerous exceptions, andthere are few, if any, of the political kind, which do not blend a considerableportion of error, with the truths they inculcate.

     In order to an accurate judgement how farthat which has been just stated ought to be deemed liable to a similarimputation, it is necessary to advert carefully to the considerations, whichplead in favour of manufactures, and which appear to recommend the special andpositive encouragement of them; in certain cases, and under certain reasonablelimitations.

     It ought readily to be conceded, that thecultivation of the earth as the primary and most certain source of nationalsupply -- as the immediate and chief source of subsistence to man -- as theprincipal source of those materials which constitute the nutriment of otherkinds of labor -- as including a state most favourable to the freedom andindependence of the human mind -- one, perhaps, most conducive to themultiplication of the human species -- has intrinsicallya strong claim to pre-eminence overevery other kind of industry.

     But, that it has a title to any thing likean exclusive predilection, in any country, ought to be admitted with greatcaution. That it is even more productive than every other branch of Industryrequires more evidence, than has yet been given in support of the position.That its real interests, precious and important as without the help ofexaggeration, they truly are, will be advanced, rather than injured by the dueencouragement of manufactures, may, it is believed, be satisfactorilydemonstrated. And it is also believed that the expediency of such encouragementin a general view may be shewn to be recommended by the most cogent andpersuasive motives of national policy.

     It has been maintained, that Agricultureis, not only, the most productive, but the only productive species of industry.The reality of this suggestion in either aspect, has, however, not beenverified by any accurate detail of facts and calculations; and the generalarguments, which are adduced to prove it, are rather subtil and paradoxical,than solid or convincing.  {196}

     Those which maintain its exclusiveproductiveness are to this effect: (974)

     Labour, bestowed upon the cultivationof land produces enough,  [281] notonly to replace all the necessary expences incurred in the business, and tomaintain the persons who are employed in it, but to afford together with the ordinary profit on the stock or capitalof the Farmer, a nett surplus, or rent for the landlord or proprietor of thesoil. But the labor of Artificers does nothing more, than replace the Stockwhich employs them (or which furnishes materials tools and wages) and yield theordinary profit upon that Stock. Ityields nothing equivalent to the rent ofland. Neither does it add any thing to the totalvalue of the whole annual produce of the land and labour of the country. Theadditional value given to those parts of the produce of land, which are wroughtinto manufactures, is counter-balanced by the value of those other parts ofthat produce, which are consumed by the manufacturers. It can therefore only beby saving, or parsimonynot by thepositive productiveness of theirlabour, that the classes of Artificers can in any degree augment the revenue ofthe Society.

     To this it has been answered --

     1 “That inasmuch as it is acknowledged,that manufacturing labour reproduces a value equal to that which is expended orconsumed in carrying it on, and continues in existence the original Stock orcapital employed -- it ought on that account alone, to escape being consideredas wholly unproductive: That though it should be admitted, as alleged, that theconsumption of the produce of the soil, by the classes of Artificers orManufacturers, is exactly equal to the value added by their labour to thematerials upon which it is exerted; yet it would not thence follow, that itadded nothing to the Revenue of the Society, or to the aggregate value of theannual produce of its land and labour. If the consumption for any given periodamounted to a given sum and the increased value of the producemanufactured, in the same period, to a likesum, the total amount of the consumption and production during that period,would be equal to the two sums,andconsequently double the value of the agricultural {197}produce consumed. Andthough the increment of value produced by the classes of Artificers should atno time exceed the value of the produce of the land consumed by them, yet therewould be at every moment, in consequence of their labour, a greater value ofgoods in the market than would exist independent of it.”

     2 -- “That the position, that Artificerscan augment the revenue of a Society, only by parsimony, is true, in no othersense, than in one, which is equally applicable to Husbandmen or Cultivators.It may be alike affirmed of all these classes, that the fund acquired by theirlabor and destined for their support is not, in an ordinary way, more thanequal to it. And hence it will follow, that augmentations of the wealth orcapital of the community (except in the instances of some extraordinary  [282]   dexterity or skill can only proceed, with respect toany of them, from the savings of the more thrifty and parsimonious."

     3 -- “That the annual produce of the landand labour of a country can only be encreased, in two ways -- by someimprovement in the productive (975) powersof the useful labour, which actually exists within it, or bysome increase in the quantity of such labour: That with regard to the first,the labour of Artificers being capable of greater subdivision and simplicity ofoperation, than that of Cultivators, it is susceptible, in a proportionablygreater degree, of improvement in itsproductivepowers, whether to be derived from an accession of Skill, or from theapplication of ingenious machinery; in which particular, therefore, the labouremployed in the culture of land can pretend to no advantage over that engagedin manufactures: That with regard to an augmentation of the quantity of usefullabour, this, excluding adventitious circumstances, must depend essentiallyupon an increase of capital, whichagain must depend upon the savings made out of the revenues of those, whofurnish or manage that, which is atany time employed, whether in Agriculture, or in Manufactures, or in any otherway.”

     But while the exclusive productiveness of Agricultural labour has been thusdenied and refuted, the superiority of its productiveness has been concededwithout hesitation. As this concession {198} involves a point of considerablemagnitude, in relation to maxims of public administration, the grounds on whichit rests are worthy of a distinct and particular examination.

     One of the arguments made use of, in supportof the idea may be pronounced both quaint and superficial. It amounts to this-- That in the productions of the soil, nature co-operates with man; and thatthe effect of their joint labour must be greater than that of the labour of manalone.

     This however, is far from being anecessary inference. It is very conceivable, that the labor of man alone laidout upon a work, requiring great skill and art to bring it to perfection, maybe more productive, in value, thanthe labour of nature and man combined, when directed towards more simpleoperations and objects: And when it is recollected to what an extent the Agencyof nature, in the application of the mechanical powers, is made auxiliary tothe prosecution of manufactures, the suggestion, which has been noticed, loseseven the appearance of plausibility.

     It might also be observed, with a contraryview, that the labour employed in Agriculture is in a great measure periodicaland occasional, depending on seasons, liable to various and long intermissions;while that occupied in many manufactures is constant and  [283]  regular, extending through the year, embracing in someinstances night as well as day. It is also probable, that there are among thecultivators of land more examples of remissness, than among artificers. Thefarmer, from the peculiar fertility of his land, or some other favorablecircumstance, may frequently obtain a livelihood, even with a considerabledegree of carelessness in the mode of cultivation; but the artisan can withdifficulty effect the same object, without exerting himself pretty equally withall those, who are engaged in the same pursuit. And if it may likewise beassumed as a fact, that manufactures open a wider field to exertions ofingenuity than agriculture, it would not be a strained (976) conjecture,that the labour employed in the former, being at once more constant, more uniform and more ingenious, than that which isemployed in the latter, will be found at the same time more productive.  {199}

     But it is not meant to lay stress onobservations of this nature they ought only to serve as a counterbalance tothose of a similar complexion. Circumstances so vague and general, as well asso abstract, can afford little instruction in a matter of this kind.

     Another, and that which seems to be theprincipal argument offered for the superior productiveness of Agriculturallabour, turns upon the allegation, that labour employed in manufactures yieldsnothing equivalent to the rent of land; or to that nett surplus, as it iscalled, which accrues to the proprietor of the soil.

     But this distinction, important as it hasbeen deemed, appears rather verbal than substantial.

     It is easily discernible, that what in thefirst instance is divided into two parts under the denominations of the ordinary profit of the Stock of thefarmer and rentto the landlord, isin the second instance united under the general appellation of the ordinary profit on the Stock of theUndertaker; and that this formal or verbal distribution constitutes the wholedifference in the two cases. It seems to have been overlooked, that the land isitself a Stock or capital, advanced or lent by its owner to the occupier ortenant, and that the rent he receives is only the ordinary profit of a certain Stockin land, not managed by the proprietor himself, but by another to whom he lendsor lets it, and who on his part advances a second capital to stock &improve the land, upon which he also receives the usual profit. The rent of thelandlord and the profit of the farmer are therefore nothing more than the ordinary profits of two capitalsbelonging to two different persons,and united in the cultivation of a farm: As in the other case, the surpluswhich arises upon any manufactory, after replacing the expences of carrying iton, answers to the ordinary profits of oneor more capitals engaged in the prosecution of such manufactory. It is saidone [284]  or more capitals; because in fact, the same thing which iscontemplated, in the case of the farm, sometimes happens in that of amanufactory. There is one, who furnishes a part of the capital, or lends a partof the money, by which it is carried on, and another, who carries {200} it onwith the addition of his own capital. Out of the surplus, which remains, afterdefraying expences, an interest is paid to the money lender for the portion ofthe capital furnished by him, which exactly agrees with the rent paid to thelandlord; and the residue of that surplus constitutes the profit of theundertaker or manufacturer, and agrees with what is denominated the ordinaryprofits on the Stock of the farmer. Both together make the ordinary profits oftwo capitals [employed in a manufactory; as in the other case the rent of thelandlord and the revenue of the farmer compose the ordinary profits of twoCapitals] employed in the cultivation of a farm.

     The rent therefore accruing to theproprietor of the land, far from being a criterion of exclusive productiveness, as has been argued, is no criterion evenof superior (977) productiveness. The question must still be, whetherthe surplus, after defraying expences, of a givencapital, employed in the purchase andimprovement of a piece of land, is greater or less, than that of a likecapital employed in the prosecution of a manufactory: or whether the whole value produced from a given capital and a given quantity of labour, employed in one way, be greater or less,than the whole value produced from anequal capital and anequal quantity of labour employed in the other way: or rather, perhaps whether thebusiness of Agriculture or that of Manufactures will yield the greatestproduct, according to a compound ratio ofthe quantity of the Capital and the quantity of labour, which are employed inthe one or in the other.

     The solution of either of these questionsis not easy; it involves numerous and complicated details, depending on anaccurate knowledge of the objects to be compared. It is not known that thecomparison has ever yet been made upon sufficient data properly ascertained andanalised. To be able to make it on the present occasion with satisfactoryprecision would demand more previous enquiry and investigation, than there hasbeen hitherto either leisure or opportunity to accomplish.

     Some essays however have been made towardsacquiring the requisite information; which have rather served to throw doubtupon, than to confirm the Hypothesis, under examination: But {201} it ought tobe acknowledged, that they have been too little diversified, and are tooimperfect, to authorise a definitive conclusion either way; leading rather toprobable conjecture than to certain deduction. They render it probable, thatthere are various branches of manufactures, in which  [285]  a givenCapital will yield a greater total product,and a considerably greater nett product, than an equal capital invested in thepurchase and improvement of lands; and that there are also some branches, in which both the gross and the nett produce will exceed that of Agriculturalindustry; according to a compound ratio of capital and labour: But it is onthis last point, that there appears to be the greatest room for doubt. It isfar less difficult to infer generally, that the nett produce of Capital engaged in manufacturing enterprises isgreater than that of Capital engaged in Agriculture.

     In stating these results, the purchase andimprovement of lands, under previous cultivation are alone contemplated. Thecomparison is more in favour of Agriculture, when it is made with reference tothe settlement of new and waste lands; but an argument drawn from so temporarya circumstance could have no weight in determining the general questionconcerning the permanent relative productiveness of the two species ofindustry. How far it ought to influence the policy of the United States, on thescore of particular situation, will be adverted to in another place.

     The foregoing suggestions are not designed to inculcate an opinion that manufacturing industry is moreproductive than that of Agriculture. They are intended rather to shew thatthe reverse of this proposition is not ascertained; that the general argumentswhich are brought to establish it are not satisfactory; and consequently that asupposition of the superior productiveness of Tillage ought to be no obstacleto listening to any substantial inducements to the encouragement ofmanufactures, which may be otherwise perceived to exist, through anapprehension, that they may have a tendency to divert labour from a more to aless profitable employment.

     It is extremely probable, that on a fulland accurate devellopment of the matter, on the ground of fact and calculation,it would be discovered that there is no material difference between theaggregate productiveness of the one, and (978) of the other kind ofindustry; and that the propriety of the encouragements, which may in any casebe proposed to be given to either ought to be determined upon considerationsirrelative to any comparison of that nature.

 

     II Butwithout contending for the superior productiveness of Manufacturing Industry,it may conduce to a better judgment of the policy, which ought to be pursuedrespecting its encouragement, {202} to contemplate the subject, under someadditional aspects, tending not only to confirm the idea, that this kind ofindustry has been improperly represented as unproductive in itself; but [to]evince in addition that the establishment and diffusion of manufactures havethe effect of rendering the total mass of useful and productive labor in acommunity,  [286]  greaterthan it would otherwise be. In prosecuting this discussion, it may benecessary briefly to resume and review some of the topics, which have beenalready touched.

     To affirm, that the labour of theManufacturer is unproductive, because he consumes as much of the produce ofland, as he adds value to the raw materials which he manufactures, is notbetter founded, than it would be to affirm, that the labour of the farmer,which furnishes materials to the manufacturer, is unproductive, because he consumes an equal value ofmanufactured articles. Each furnishes a certain portion of the produce ofhis labor to the other, and each destroys a correspondent portion of theproduce of the labour of the other. In the mean time, the maintenance of twoCitizens, instead of one, is going on; the State has two members instead ofone; and they together consume twice the value of what is produced from theland.

     If instead of a farmer and artificer,there were a farmer only, he would be under the necessity of devoting a part ofhis labour to the fabrication of cloathing and other articles, which he wouldprocure of the artificer, in the case of there being such a person; and ofcourse he would be able to devote less labor to the cultivation of his farm;and would draw from it a proportionably less product. The whole quantity ofproduction, in this state of things, in provisions, raw materials andmanufactures, would certainly not exceed in value the amount of what would beproduced in provisions and raw materials only, if there were an artificer aswell as a farmer.

     Again -- if there were both an artificerand a farmer, the latter would be left at liberty to pursue exclusively thecultivation of his farm. A greater quantity of provisions and raw materials wouldof course be produced -- equal at least -- as has been already observed, to thewhole amount of the provisions, raw materials {203} and manufactures, whichwould exist on a contrary supposition. The artificer, at the same time would begoing on in the production of manufactured commodities; to an amount sufficientnot only to repay the farmer, in those commodities, for the provisions andmaterials which were procured from him, but to furnish the Artificer himselfwith a supply of similar commodities for his own use. Thus then, there would betwo quantities or values in existence, instead of one; and the revenue andconsumption (979) would be double in one case, what it would be in theother.

     If in place of both these suppositions,there were supposed to be two farmers, and no artificer, each of whom applied apart of his labour to the culture of land, and another part to the fabricationof Manufactures -- in this case, the portion of the labour of both bestowedupon land would produce the same quantity of provisions  [287]  and raw materials only, as would be produced by the intiresum of the labour of one applied in the same manner, and the portion of thelabour of both bestowed upon manufactures, would produce the same quantity ofmanufactures only, as would be produced by the intire sum of the labour of oneapplied in the same manner. Hence the produce of the labour of the two farmerswould not be greater than the produce of the labour of the farmer andartificer; and hence, it results, that the labour of the artificer is aspossitively productive as that of the farmer, and, as positively, augments therevenue of the Society.

     The labour of the Artificer replaces tothe farmer that portion of his labour, with which he provides the materials ofexchange with the Artificer, and which he would otherwise have been compelledto apply to manufactures: and while the Artificer thus enables the farmer toenlarge his stock of Agricultural industry, a portion of which he purchases forhis own use, he also supplies himselfwith the manufactured articles ofwhich he stands in need.  Hedoes still more -- Besides this equivalent which he gives for the portion ofAgricultural labour consumed by him, and this supply of manufacturedcommodities for his own consumption -- he furnishes still a surplus, whichcompensates for the use of the Capital advanced either by himself or some otherperson, for carrying on the business. This is the ordinary profit of the {204}stock employed in the manufactory, and is, in every sense, as effective anaddition to the income of the Society, as the rent of land.

     The produce of the labour of the Artificerconsequently, may be regarded as composed of three parts; one by which theprovisions for his subsistence and the materials for his work are purchased ofthe farmer, one by which he supplies himself with manufactured necessaries, anda third which constitutes the profit on the Stock employed. The two lastportions seem to have been overlooked in the system, which represents manufacturingindustry as barren and unproductive.

     In the course of the precedingillustrations, the products of equal quantities of the labour of the farmer andartificer have been treated as if equal to each other. But this is not to be understoodas intending to assert any such precise equality. It is merely a manner ofexpression adopted for the sake of simplicity and perspicuity. Whether thevalue of the produce of the labour of the farmer be somewhat more or less, thanthat of the artificer, is not material to the main scope of the argument, whichhitherto has only aimed at shewing, that the one, as well as the other,occasions a possitive augmentation of the total produce and revenue of theSociety. 

 

[288]{204} (980)      It is nowproper to proceed a step further, and to enumerate the principal circumstances,from which it may be inferred -- That manufacturing establishments not onlyoccasion a possitive augmentation of the Produce and Revenue of the Society,but that they contribute essentially to rendering them greater than they couldpossibly be, without such establishments. These circumstances are --

     1. The division of Labour.

     2. An extension of the use of Machinery.

     3. Additional employment to classes of thecommunity not ordinarily engaged in the business.

     4. The promoting of emigration fromforeign Countries.

     5. The furnishing greater scope for thediversity of talents and dispositions which discriminate men from each other.

     6. The affording a more ample and variousfield for enterprise. {205}

     7. The creating in some instances a new,and securing in all, a more certain and steady demand for the surplus produceof the soil.

     Each of these circumstances has aconsiderable influence upon the total mass of industrious effort in acommunity. Together, they add to it a degree of energy and effect, which arenot easily conceived. Some comments upon each of them, in the order in whichthey have been stated, may serve to explain their importance.

 

1. As to theDivision of Labour.

     It has justly been observed, that there isscarcely any thing of greater moment in the economy of a nation, than theproper division of labour. The separation of occupations causes each to becarried to a much greater perfection, than it could possible acquire, if theywere blended. This arises principally from three circumstances.

     lst -- The greater skill and dexteritynaturally resulting from a constant and undivided application to a singleobject. It is evident, that these properties must increase, in proportion tothe separation and simplification of objects and the steadiness of theattention devoted to each; and must be less, in proportion to the complicationof objects, and the number among which the attention is distracted.

    2nd. The economy of time -- by avoiding the loss of it, incident to afrequent transition from one operation to another of a different nature. Thisdepends on various circumstances -- the transition itself -- the orderlydisposition of the impliments, machines and materials employed in the operationto be relinquished -- the preparatory steps to the commencement of a new one --the interruption of the impulse, which the mind of the workman acquires, frombeing engaged in a particular operation -- the distractions hesitations andreluctances,  [289]  which attend the passage from one kindof business to another.

     3rd. An extension of the use of Machinery.A man occupied on a single object will have it more in his power, and will bemore naturally led to exert his imagination in devising methods {206}tofacilitate and abrige labour, than if he were perplexed by a variety ofindependent and dissimilar opera- (981) tions. Besides this, thefabrication of Machines, in numerous instances, becoming itself a distincttrade, the Artist who follows it, has all the advantages which have beenenumerated, for improvement in his particular art; and in both ways theinvention and application of machinery are extended.

     And from these causes united, the mereseparation of the occupation of the cultivator, from that of the Artificer, hasthe effect of augmenting theproductivepowers of labour, and with them, the total mass of the produce or revenueof a Country. In this single view of the subject, therefore, the utility ofArtificers or Manufacturers, towards promoting an increase of productiveindustry, is apparent.

 

    2. As to an extension of the use of Machinery a point which though partlyanticipated requires to be placed in one or two additional lights.

     Theemployment of Machinery forms an item of great importance in the general massof national industry. ‘Tis an artificial force brought in aid of the naturalforce of man; and, to all the purposes of labour, is an increase of hands; anaccession of strength, unencumbered too by the expence of maintaining thelaborer. May it not therefore be fairly inferred, that those occupations,which give greatest scope to the use of this auxiliary, contribute most to thegeneral Stock of industrious effort, and, in consequence, to the generalproduct of industry?

     It shall be taken for granted, and thetruth of the position referred to observation, that manufacturing pursuits aresusceptible in a greater degree of the application of machinery, than those ofAgriculture. If so all the difference is lost to a community, which, instead ofmanufacturing for itself, procures the fabrics requisite to its supply fromother Countries. The substitution of foreign for domestic manufactures is atransfer to foreign nations of the advantages accruing from the employment ofMachinery, in the modes in which it is capable of being employed, with mostutility and to the greatest extent. {207}

     The Cotton Mill invented in England,within the last twenty years, is a signal illustration of the generalproposition, which has been just advanced. In consequence of it, all thedifferent processes for spining Cotton are performed by means of Machines,which are  [290]   ut in motion by water, andattended chiefly by women and Children; [and by a smaller] number of [persons,in the whole, than are] requisite in the ordinary mode of spinning. And it isan advantage of great moment that the operations of this mill continue withconvenience, during the night, as well as through the day. The prodigiousaffect of such a Machine is easily conceived. To this invention is to beattributed essentially the immense progress, which has been so suddenly made inGreat Britain in the various fabrics of Cotton.

 

     3. As to the additional employment of classesof the community, not ordinarily engaged in the particular business.

     This is not among the least valuable ofthe means, by which manufacturing institutions con- (982) tribute toaugment the general stock of industry and production. In places where thoseinstitutions prevail, besides the persons regularly engaged in them, theyafford occasional and extra employment to industrious individuals and families,who are willing to devote the leisure resulting from the intermissions of theirordinary pursuits to collateral labours, as a resource of multiplying theiracquisitions or [their] enjoyments. The husbandman himself experiences a newsource of profit and support from the encreased industry of his wife anddaughters; invited and stimulated by the demands of the neighboringmanufactories.

     Besides this advantage of occasionalemployment to classes having different occupations, there is another of anature allied to it [and] of a similar tendency. This is -- the employment of personswho would otherwise be idle (and in many cases a burthen on the community),either from the byass of temper, habit, infirmity of body, or some other cause,indisposing, or disqualifying them for the toils of the Country. It is worthyof particular remark, that, in general, women and Children are rendered more{208} useful and the latter more early useful by manufacturing establishments,than they would otherwise be. Of the number of persons employed in the CottonManufactories of Great Britain, it is computed that 4/7 nearly are women andchildren; of whom the greatest proportion are children and many of them of avery tender age.

     And thus it appears to be one of theattributes of manufactures, and one of no small consequence, to give occasionto the exertion of a greater quantity of Industry, even by the same number of persons, where theyhappen to prevail, than would exist, if there were no such establishments.

    

4. As to thepromoting of emigration from foreign Countries.

     Men reluctantly quit one course ofoccupation and livelihood for another, unless invited to it by very apparentand proximate advantages. Many, who would go from one country to another, ifthey had  [291]  a prospect of continuing with morebenefit the callings, to which they have been educated, will often not betempted to change their situation, by the hope of doing better, in some otherway. Manufacturers, who listening to the powerful invitations of a better pricefor their fabrics, or their labour, of greater cheapness of provisions and rawmaterials, of an exemption from the chief part of the taxes burthens andrestraints, which they endure in the old world, of greater personalindependence and consequence, under the operation of a more equal government,and of what is far more precious than mere religious toleration -- a perfectequality of religious privileges; would probably flock from Europe to theUnited States to pursue their own trades or professions, if they were once madesensible of the advantages they would enjoy, and were inspired with anassurance of encouragement and employment, will, with difficulty, be induced totransplant themselves, with a view to becoming Cultivators of Land.

     If it be true then, that it is theinterest of the United States to open every possible avenue to (983) emigrationfrom abroad, it affords a weighty argument for the encouragement ofmanufactures; {209} which for the reasons just assigned, will have thestrongest tendency to multiply the inducements to it.

     Here is perceived an important resource,not only for extending the population, and with it the useful and productivelabour of the country, but likewise for the prosecution of manufactures,without deducting from the number of hands, which might otherwise be drawn totillage; and even for the indemnification of Agriculture for such as mighthappen to be diverted from it. Many, whom Manufacturing views would induce toemigrate, would afterwards yield to the temptations, which the particularsituation of this Country holds out to Agricultural pursuits. And whileAgriculture would in other respects derive many signal and unmingledadvantages, from the growth of manufactures, it is a problem whether it wouldgain or lose, as to the article of the number of persons employed in carryingit on.

    

5. As to thefurnishing greater scope for the diversity of talents and dispositions, whichdiscriminate men from each other.

     This is a much more powerful mean ofaugmenting the fund of national Industry than may at first sight appear. It isa just observation, that minds of the strongest and most active powers fortheir proper objects fall below mediocrity and labour without effect, ifconfined to uncongenial pursuits. And it is thence to be inferred, that theresults of human exertion may be immensely increased by diversifying itsobjects. When all the different kinds of industry obtain in a community, eachindividual can find his proper element, and can call  [292]  intoactivity the whole vigour of his nature. And the community is benefitted by theservices of its respective members, in the manner, in which each can serve itwith most effect.

     If there be anything in a remark often tobe met with -- namely that there is, in the genius of the people of thiscountry, a peculiar aptitude for mechanic improvements, it would operate as aforcible reason for giving opportunities to the exercise of that species oftalent, by the propagation of manufactures.  {210}

 

6. As to theaffording a more ample

and variousfield for enterprise.

     This also is of greater consequence in thegeneral scale of national exertion, than might perhaps on a superficial view besupposed, and has effects not altogether dissimilar from those of thecircumstance last noticed. To cherish and stimulate the activity of the humanmind, by multiplying the objects of enterprise, is not among the leastconsiderable of the expedients, by which the wealth of a nation may bepromoted. Even things in themselves not positively advantageous, sometimesbecome so, by their tendency to provoke exertion. Every new scene, which isopened to the busy nature of man to rouse and exert itself, is the addition ofa new energy to the general stock of effort.

     The spirit of enterprise, useful andprolific as it is, must necessarily be contracted or expanded in proportion tothe simplicity or variety of the oc- (984)cupations and productions,which are to be found in a Society. It must be less in a nation of merecultivators, than in a nation of cultivators and merchants; less in a nation ofcultivators and merchants, than in a nation of cultivators, artificers andmerchants.

 

7. As to thecreating, in some instances, a new, and securing in all a more certain andsteady demand

 for the surplus produce of the soil.

     This is among the most important of thecircumstances which have been indicated. It is a principal mean, by which theestablishment of manufactures contributes to an augmentation of the produce orrevenue of a country, and has an immediate and direct relation to theprosperity of Agriculture.

     It is evident, that the exertions of thehusbandman will be steady or fluctuating, vigorous or feeble, in proportion tothe steadiness or fluctuation, adequateness, or inadequateness of the marketson which he must depend, for the vent of the surplus, which may be produced byhis labour; and that such surplus in the ordinary course of things will begreater or less in the same proportion. {211}

     For the purpose of this vent, a domesticmarket is greatly to be

[293] preferred to a foreign one;because it is in the nature of things, far more to be relied upon.

     It is a primary object of the policy ofnations, to be able to supply themselves with subsistence from their own soils;and manufacturing nations, as far as circumstances permit, endeavor to procure,from the same source, the raw materials necessary for their own fabrics. Thisdisposition, urged by the spirit of monopoly, is sometimes even carried to aninjudicious extreme. It seems not always to be recollected, that nations, whohave neither mines nor manufactures, can only obtain the manufactured articles,of which they stand in need, by an exchange of the products of their soils; andthat, if those who can best furnish them with such articles are unwilling togive a due course to this exchange, they must of necessity make every possibleeffort to manufacture for themselves, the effect of which is that themanufacturing nations abrige the natural advantages of their situation, throughan unwillingness to permit the Agricultural countries to enjoy the advantagesof theirs, and sacrifice the interests of a mutually beneficial intercourse tothe vain project of selling every thing andbuying nothing.

     But it is also a consequence of thepolicy, which has been noted, that the foreign demand for the products ofAgricultural Countries, is, in a great degree, rather casual and occasional,than certain or constant. To what extent injurious interruptions of the demandfor some of the staple commodities of the United States, may have beenexperienced, from that cause, must be referred to the judgment of those who areengaged in carrying on the commerce of the country; but it may be safelyassumed, that such interruptions are at times very inconveniently felt, andthat cases not unfrequently occur, in which markets are so confined andrestricted, as to render the demand very unequal to the supply.

     Independently (985) likewise of theartificial impediments, which are created by the policy in question, there arenatural causes tending to render the external demand for the surplus ofAgricultural nations a precarious reliance. The differences of seasons,  {212} in the countries, which are theconsumers make immense differences in the produce of their own soils, indifferent years; and consequently in the degrees of their necessity for foreignsupply. Plentiful harvests with them, especially if similar ones occur at thesame time in the countries, which are the furnishers, occasion of course a glutin the markets of the latter.

     Considering how fast and how much theprogress of new settlements in the United States must increase the surplusproduce of the soil, and weighing seriously the tendency of the system, whichprevails  [294]  among most of the commercial nations ofEurope; whatever dependence may be placed on the force of natural circumstancesto counteract the effects of an artificial policy; there appear strong reasonsto regard the foreign demand for that surplus as too uncertain a reliance, andto desire a substitute for it, in an extensive domestic market.

     To secure such a market, there is no otherexpedient, than to promote manufacturing establishments. Manufacturers whoconstitute the most numerous class, after the Cultivators of land, are for thatreason the principal consumers of the surplus of their labour.

     This idea of an extensive domestic marketfor the surplus produce of the soil is of the first consequence. It is of allthings, that which most effectually conduces to a flourishing state ofAgriculture. If the effect of manufactories should be to detach a portion ofthe hands, which would otherwise be engaged in Tillage, it might possibly causea smaller quantity of lands to be under cultivation but by their tendency toprocure a more certain demand for the surplus produce of the soil, they would,at the same time, cause the lands which were in cultivation to be betterimproved and more productive. And while, by their influence, the condition ofeach individual farmer would be meliorated, the total mass of Agriculturalproduction would probably be increased. For this must evidently depend as much,if not more, upon the degree of improvement; than upon the number of acresunder culture.

     It merits particular observation, that themultiplication of manufactories not only furnishes a Market for those articles,{213} which have been accustomed to be produced in abundance, in a country; butit likewise creates a demand for such as were either unknown or produced ininconsiderable quantities. The bowels as well as the surface of the earth areransacked for articles which were before neglected. Animals, Plants andMinerals acquire an utility and value, which were before unexplored.

     The foregoing considerations seemsufficient to establish, as general propositions, That it is the interest ofnations to diversify the industrious pursuits of the individuals, who composethem -- That the establishment of manufactures is calculated not only to (986)increase the general stock of useful and productive labour; but even toimprove the state of Agriculture in particular; certainly to advance theinterests of those who are engaged in it. There are other views, that will behereafter taken of the subject, which, it is conceived, will serve to confirmthese inferences.

 

     IIIPreviously to a further discussion of the objections to the encouragement ofmanufactures which have been stated, it will be of use to  [295]  see what can be said, in reference to the particularsituation of the United States, against the conclusions appearing to resultfrom what has been already offered.

     It may be observed, and the idea is of noinconsiderable weight, that however true it might be, that a State, whichpossessing large tracts of vacant and fertile territory, was at the same time secludedfrom foreign commerce, would find its interest and the interest of Agriculture,in diverting a part of its population from Tillage to Manufactures; yet it willnot follow, that the same is true of a State, which having such vacant andfertile territory, has at the same time ample opportunity of procuring fromabroad, on good terms, all the fabrics of which it stands in need, for thesupply of its inhabitants. The power of doing this at least secures the greatadvantage of a division of labour; leaving the farmer free to pursueexclusively the culture of his land, and enabling him to procure with itsproducts the manufactured supplies requisite either to his wants or to hisenjoyments. And though it should be true, that in settled countries, the diversificationof Industry is conducive to an increase {214} in the productive powers oflabour, and to an augmentation of revenue and capital; yet it is scarcelyconceivable that there can be any [thing] of so solid and permanent advantageto an uncultivated and unpeopled country as to convert its wastes intocultivated and inhabited districts. If the Revenue, in the mean time, should beless, the Capital, in the event, must be greater.

 

     To these observations, the followingappears to be a satisfactory answer --

     1. If the system of perfect liberty toindustry and commerce were the prevailing system of nations -- the argumentswhich dissuade a country in the predicament of the United States, from thezealous pursuits of manufactures would doubtless have great force. It will notbe affirmed, that they might not be permitted, with few exceptions, to serve asa rule of national conduct. In such a state of things, each country would havethe full benefit of its peculiar advantages to compensate for its deficienciesor disadvantages. If one nation were in condition to supply manufacturedarticles on better terms than another, that other might find an abundantindemnification in a superior capacity to furnish the produce of the soil. Anda free exchange, mutually beneficial, of the commodities which each was able tosupply, on the best terms, might be carried on between them, supporting in fullvigour the industry of each. And though the circumstances which have beenmentioned and others, which will be unfolded hereafter render it probable, thatnations merely Agricultural would (987) not enjoy the same degree ofopulence, in proportion to [296]  their numbers, asthose which united manufactures with agriculture; yet the progressiveimprovement of the lands of the former might, in the end, atone for an inferiordegree of opulence in the mean time: and in a case in which oppositeconsiderations are pretty equally balanced, the option ought perhaps always tobe, in favour of leaving Industry to its own direction.

     But the system which has been mentioned,is far from characterising the general policy of Nations. The prevalent one hasbeen regulated by an opposite spirit.

     The consequence of it is,  {215} that the United States are to acertain extent in the situation of a country precluded from foreign Commerce.They can indeed, without difficulty obtain from abroad the manufacturedsupplies, of which they are in want; but they experience numerous and veryinjurious impediments to the emission and vent of their own commodities. Nor isthis the case in reference to a single foreign nation only. The regulations ofseveral countries, with which we have the most extensive intercourse, throwserious obstructions in the way of the principal staples of the United States.

     In such a position of things, the UnitedStates cannot exchange with Europe on equal terms; and the want of reciprocitywould render them the victim of a system, which should induce them to confinetheir views to Agriculture and refrain from Manufactures. A constant andencreasing necessity, on their part, for the commodities of Europe, and only apartial and occasional demand for their own, in return, could not but exposethem to a state of impoverishment, compared with the opulence to which theirpolitical and natural advantages authorise them to aspire.

     Remarks of this kind are not made in thespirit of complaint. 'Tis for the nations, whose regulations are alluded to, tojudge for themselves, whether, by aiming at too much they do not lose more thanthey gain. 'Tis for the United States to consider by what means they can renderthemselves least dependent, on the combinations, right or wrong of foreignpolicy.

     It is no small consolation, that alreadythe measures which have embarrassed our Trade, have accelerated internalimprovements, which upon the whole have bettered our affairs. To diversify andextend these improvements is the surest and safest method of indemnifyingourselves for any inconveniences, which those or similar measures have atendency to beget. If Europe will not take from us the products of our soil,upon terms consistent with our interest, the natural remedy is to contract asfast as possible our wants of her.

     2. The conversion of their waste intocultivated lands is certainly a point of great moment in the politicalcalculations {216} of the United [297]  States. But thedegree in which this may possibly be retarded by the encouragement ofmanufactories does not appear to countervail the powerful inducements toaffording that encouragement.

     An observation made in another place is ofa nature to have great influence upon this question. If it cannot be denied,that the interests even of (988)Agriculture may be advanced more byhaving such of the lands of a state as are occupied under good cultivation,than by having a greater quantity occupied under a much inferior cultivation,and if Manufactories, for the reasons assigned, must be admitted to have atendency to promote a more steady and vigorous cultivation of the landsoccupied than would happen without them -- it will follow, that they arecapable of indemnifying a country for a diminution of the progress of newsettlements; and may serve to increase both the capital [value] and the incomeof its lands, even though they should abrige the number of acres under Tillage.

     But it does, by no means, follow, that theprogress of new settlements would be retarded by the extension of Manufactures.The desire of being an independent proprietor of land is founded on such strongprinciples in the human breast, that where the opportunity of becoming so is asgreat as it is in the United States, the proportion will be small of those,whose situations would otherwise lead to it, who would be diverted from ittowards Manufactures. And it is highly probable, as already intimated, that theaccessions of foreigners, who originally drawn over by manufacturing viewswould afterwards abandon them for Agricultural, would be more than equivalentfor those of our own Citizens, who might happen to be detached from them.

     The remaining objections to a particularencouragement of manufactures in the United States now require to be examined.

     One of these turns on the proposition,that Industry, if left to itself, will naturally find its way to the mostuseful and profitable employment: whence it is inferred, that manufactureswithout the aid of government will grow up as soon and as fast, as the naturalstate of things and the interest of the community may require.  {217}

     Against the solidity of this hypothesis, in the fulllatitude of the terms, very cogent reasons may be offered. These have relationto the strong influence of habit and the spirit of imitation -- the fear ofwant of success in untried enterprises -- the intrinsic difficulties incidentto first essays towards a competition with those who have previously attainedto perfection in the business to be attempted -- the bounties premiums andother artificial encouragements, with which foreign nations second the exertionsof their own Citizens in the branches, in which they are to be rivalled.  [298]

     Experience teaches, that men are often somuch governed by what they are accustomed to see and practice, that thesimplest and most obvious improvements, in the [most] ordinary occupations, areadopted with hesitation, reluctance and by slow gradations. The spontaneoustransition to new pursuits, in a community long habituated to different ones,may be expected to be attended with proportionably greater difficulty. Whenformer occupations ceased to yield a profit adequate to the subsistence oftheir followers, or when there was an absolute deficiency of employment inthem, owing to the superabundance of hands, changes would ensue; but thesechanges would be likely (989) to be more tardy than might consist withthe interest either of individuals or of the Society. In many cases they wouldnot happen, while a bare support could be ensured by an adherence to ancientcourses; though a resort to a more profitable employment might be practicable.To produce the desireable changes, as early as may be expedient, may thereforerequire the incitement and patronage of government.

     The apprehension of failing in newattempts is perhaps a more serious impediment. There are dispositions apt to beattracted by the mere novelty of an undertaking -- but these are not alwaysthose best calculated to give it success. To this, it is of importance that theconfidence of cautious sagacious capitalists both citizens and foreigners, shouldbe excited. And to inspire this description of persons with confidence, it isessential, that they should be made to see in any project, which is new, {218}and for that reason alone, if, for no other, precarious, the prospect of such adegree of countenance and support from government, as may be capable ofovercoming the obstacles, inseparable from first experiments.

     The superiority antecedently enjoyed bynations, who have preoccupied and perfected a branch of industry, constitutes amore formidable obstacle, than either of those, which have been mentioned, tothe introduction of the same branch into a country, in which it did not beforeexist. To maintain between the recent establishments of one country and thelong matured establishments of another country, a competition upon equal terms,both as to quality and price, is in most cases impracticable. The disparity inthe one, or in the other, or in both, must necessarily be so considerable as toforbid a successful rivalship, without the extraordinary aid and protection ofgovernment.

     But the greatest obstacle of all to thesuccessful prosecution of a new branch of industry in a country, in which itwas before unknown, consists, as far as the instances apply, in the bountiespremiums and other aids which are granted, in a variety of cases, by the  [299]  nations, in which the establishments to be imitated arepreviously introduced. It is well known (and particular examples in the courseof this report will be cited) that certain nations grant bounties on theexportation of particular commodities, to enable their own workmen to underselland supplant all competitors, in the countries to which those commodities aresent. Hence the undertakers of a new manufacture have to contend not only withthe natural disadvantages of a new undertaking, but with the gratuities andremunerations which other governments bestow. To be enabled to contend withsuccess, it is evident, that the interference and aid of their own governmentare indispensable.

     Combinations by those engaged in aparticular branch of business in one country, to frustrate the first efforts tointroduce it into another, by temporary sacrifices, recompensed perhaps byextraordinary indemnifications of the government of such country, are believedto have existed, and are not to be regarded as destitute of probability. (990)The existence or assurance of aid {219} from the government of the country,in which the business is to be introduced, may be essential to fortifyadventurers against the dread of such combinations, to defeat their effects, ifformed and to prevent their being formed, by demonstrating that they must inthe end prove fruitless.

     Whatever room there may be for anexpectation that the industry of a people, under the direction of privateinterest, will upon equal terms find out the most beneficial employment foritself, there is none for a reliance, that it will struggle against the forceof unequal terms, or will of itself surmount all the adventitious barriers to asuccessful competition, which may have been erected either by the advantagesnaturally acquired from practice and previous possession of the ground, or bythose which may have sprung from positive regulations and an artificial policy.This general reflection might alone suffice as an answer to the objection underexamination; exclusively of the weighty considerations which have beenparticularly urged.  {219}

     The objections to the pursuit ofmanufactures in the United States, which next present themselves to discussion,represent an impracticability of success, arising from three causes -- scarcityof hand"earness of labour -- want of capital.

     The two first circumstances are to acertain extent real, and, within due limits, ought to be admitted as obstaclesto the success of manufacturing enterprise in the United States. But there arevarious considerations, which lessen their force, and tend to afford anassurance that they are not sufficient to prevent the advantageous prosecutionof many very useful and extensive manufactories.

     With regard to scarcity of hands, the factitself must be applied  [300]  with no small qualification to certainparts of the United States. There are large districts, which may be consideredas pretty fully peopled; and which notwithstanding a continual drain fordistant settlement, are thickly interspersed with flourishing and increasingtowns. If these districts have not already reached the point, at which thecomplaint of scarcity of hands ceases, they are not remote from it, and areapproaching fast towards it: And having perhaps fewer attractions toagriculture, {220} than some other parts of the Union, they exhibit aproportionably stronger tendency towards other kinds of industry. In thesedistricts, may be discerned, no inconsiderable maturity for manufacturingestablishments.

     But there are circumstances, which havebeen already noticed with another view, that materially diminish every wherethe effect of a scarcity of hands. These circumstances are -- the great usewhich can be made of women and children; on which point a very pregnant andinstructive fact has been mentioned -- the vast extension given by lateimprovements to the employment of Machines, which substituting the Agency offire and water, has prodigiously lessened the necessity for manual labor -- theemployment of persons ordinarily engaged in other occupations, during theseasons, or hours of leisure; which, besides giving occasion to the exertion ofa greater quantity of (991) labour by the same number of persons, andthereby encreasing the general stock of labour, as has been elsewhere remarked,may also be taken into the calculation, as a resource for obviating thescarcity of hands -- lastly the attraction of foreign emigrants. Whoeverinspects, with a careful eye, the composition of our towns will be madesensible to what an extent this resource may be relied upon. This exhibits alarge proportion of ingenious and valuable workmen, in different arts andtrades, who, by expatriating from Europe, have improved their own condition,and added to the industry and wealth of the United States. It is a naturalinference from the experience, we have already had, that as soon as the UnitedStates shall present the countenance of a serious prosecution of Manufactures-- as soon as foreign artists shall be made sensible that the state of thingshere affords a moral certainty of employment and encouragement -- competentnumbers of European workmen will transplant themselves, effectually to ensurethe success of the design. How indeed can it otherwise happen considering thevarious and powerful inducements, which the situation of this country offers;addressing themselves to so many strong passions and feelings, to so manygeneral and particular interests?

     It may be affirmed therefore, in respectto hands for carrying {221} on manufactures, that we shall in a great measuretrade upon a foreign Stock; reserving our own, for the cultivation of our landsand the  [301] manning of ourShips; as far as character and circumstances [shall] incline. It is notunworthy of remark, that the objection to the success of manufactures, deducedfrom the scarcity of hands, is alike applicable to Trade and Navigation; andyet these are perceived to flourish, without any sensible impediment from thatcause.

     As to the dearness of labour (another ofthe obstacles alledged) this has relation principally to two circumstances, onethat which has been just discussed, or the scarcity of hands, the other, thegreatness of profits.

     Asfar as it is a consequence of the scarcity of hands, it is mitigated by all theconsiderations which have been adduced as lessening that deficiency.

     It is certain too, that the disparity inthis respect, between some of the most manufacturing parts of Europe and alarge proportion of the United States, is not nearly so great as is commonlyimagined. It is also much less in regard to Artificers and manufacturers thanin regard to country labourers; and while a careful comparison shews, that thereis, in this particular, much exaggeration; it is also evident that the effectof the degree of disparity, which does truly exist, is diminished in proportionto the use which can be made of machinery.

     To illustrate this last idea -- Let it besupposed, that the difference of price, in two Countries, of a given quantityof manual labour requisite to the fabrication of a given article is as 10; andthat some mechanic power is introduced into both countries,which performing half the necessary labour, leaves only half to be done byhand, it is evident, that the difference in the cost of the fabri- (992) cationof the article in question, in the two countries, as far as it is connectedwith the price of labour, will be reduced from 10. to 5, in consequence of theintroduction of that power.

     This circumstance is worthy of the mostparticular attention. It diminishes immensely one of the objections moststrenuously urged, against the success of manufactures in the United States.

     To procure all such machines as are knownin any part of Europe, can only require a proper provision and due pains. The{222} knowledge of several of the most important of them is already possessed.The preparation of them here, is in most cases, practicable on nearly equal terms.As far as they depend on Water, some superiority of advantages may be claimed,from the uncommon variety and greater cheapness of situations adapted to Millseats, with which different parts of the United States abound.

     So far as the dearness of labour may be aconsequence of the greatness of profits in any branch of business, it is noobstacle to its success. The Undertaker can afford to pay the price.  [302]

     There are grounds to conclude thatundertakers of Manufactures in this Country can at this time afford to payhigher wages to the workmen they may employ than are paid to similar workmen inEurope. The prices of foreign fabrics, in the markets of the United States,which will for a long time regulate the prices of the domestic ones, may beconsidered as compounded of the following ingredients -- The first cost ofmaterials, including the Taxes, if any, which are paid upon them where they aremade: the expence of grounds, buildings machinery and tools: the wages of thepersons employed in the manufactory: the profits on the capital or Stockemployed: the commissions of Agents to purchase them where they are made; theexpence of transportation to the United States [including insurance and otherincidental charges;] the taxes or duties, if any [and fees of office] which arepaid on their exportation: the taxes or duties [and fees of office] which arepaid on their importation.

     As to the first of these items, the costof materials, the advantage upon the whole, is at present on the side of theUnited States, and the difference, in their favor, must increase, in proportionas a certain and extensive domestic demand shall induce the proprietors of landto devote more of their attention to the production of those materials. Itought not to escape observation, in a comparison on this point, that some ofthe principal manufacturing Countries of Europe are much more dependent onforeign supply for the materials of their manufactures, than would be theUnited States, who are capable of supplying themselves, with a greaterabundance, as well as a greater variety of the requisite materials.  {223}

     As to the second item, the expence ofgrounds buildings machinery and tools, an equality at least may be assumed;since advantages in some particulars will counterbalance temporarydisadvantages in others.

     As to the third item, or the article ofwages, the comparison certainly turns against the United (993) States,though as before observed not in so great a degree as is commonly supposed.

     The fourth item is alike applicable to theforeign and to the domestic manufacture. It is indeed more properly a result than a particular, to becompared.

     But with respect to all the remainingitems, they are alone applicable to the foreign manufacture, and in thestrictest sense extraordinaries; constituting a sum of extra charge on theforeign fabric, which cannot be estimated, at less than [from 15 to 301 19Cent. on the cost of it at the manufactory.

     This sum of extra charge may confidentlybe regarded as more than a Counterpoise for the real difference in the price oflabour; and  [303]  is a satisfactory proof thatmanufactures may prosper in defiance of it in the United States. To the generalallegation, connected with the circumstances of scarcity of hands and dearnessof labour, that extensive manufactures can only grow out of a redundant or fullpopulation, it will be sufficient, to answer generally, that the fact has beenotherwise -- That the situation alleged to be an essential condition ofsuccess, has not been that of several nations, at periods when they had alreadyattained to maturity in a variety of manufactures.

     The supposed want of Capital for theprosecution of manufactures in the United States is the most indefinite of theobjections which are usually opposed to it.

     It is very difficult to pronounce anything precise concerning the real extent of the monied capital of a Country,and still more concerning the proportion which it bears to the objects thatinvite the employment of Capital. It is not less difficult to pronounce how farthe effect of any given quantity ofmoney, as capital, or in other words, as a medium for circulating the industryand property of a nation, may be encreased by the very circumstance {224}  of the additional motion, which isgiven to it by new objects of employment. That effect, like the momentum ofdescending bodies, may not improperly be represented, as in a compound ratio tomass and velocity. It seems prettycertain, that a given sum of money, in a situation, in which the quick impulsesof commercial activity were little felt, would appear inadequate to thecirculation of as great a quantity of industry and property, as in one, inwhich their full influence was experienced.

     It is not obvious, why the same objectionmight not as well be made to external commerce as to manufactures; since it ismanifest that our immense tracts of land occupied and unoccupied are capable ofgiving employment to more capital than is actually bestowed upon them. It iscertain, that the United States offer a vast field for the advantageousemployment of Capital; but it does not follow, that there will not be found, inone way or another, a sufficient fund for the successful prosecution of anyspecies of industry which is likely to prove truly beneficial.

     The following considerations are of anature to remove all inquietude on the score of want of Capital.

     The introduction of Banks, as has beenshewn (994) on another occasion has a powerful tendency to extend theactive Capital of a Country. Experience of the Utility of these Institutions ismultiplying them in the United States. It is probable that they will beestablished wherever they can exist with advantage; and wherever, they can besupported, if administered with prudence, they will add new energies to allpecuniary operations.  [304]

     The aid of foreign Capital may safely,and, with considerable latitude be taken into calculation. Its instrumentalityhas been long experienced in our external commerce; and it has begun to be feltin various other modes. Not only our funds, but our Agriculture and otherinternal improvements have been animated by it. It has already in a fewinstances extended even to our manufactures.

     It is a well known fact, that there areparts of Europe, which have more Capital, than profitable domestic objects ofemployment. Hence, among other proofs, the large loans continually furnished toforeign states. And it is equally certain that the  {225} capital of other parts may find more profitableemployment in the United States, than at home. And notwithstanding there areweighty inducements to prefer the employment of capital at home even at lessprofit, to an investment of it abroad, though with greater gain, yet theseinducements are overruled either by a deficiency of employment or by a verymaterial difference in profit. Both these Causes operate to produce a transferof foreign capital to the United States. 'Tis certain, that various objects inthis country hold out advantages, which are with difficulty to be equalledelsewhere; and under the increasingly favorable impressions, which areentertained of our government, the attractions will become more and Morestrong. These impressions will prove a rich mine of prosperity to the Country,if they are confirmed and strengthened by the progress of our affairs. And tosecure this advantage, little more is now necessary, than to foster industry,and cultivate order and tranquility, at home and abroad.

     It is not impossible, that there may bepersons disposed to look with a jealous eye on the introduction of foreignCapital, as if it were an instrument to deprive our own citizens of the profitsof our own industry: But perhaps there never could be a more unreasonablejealousy. Instead of being viewed as a rival, it ought to be Considered as amost valuable auxiliary; conducing to put in Motion a greater Quantity ofproductive labour, and a greater portion of useful enterprise than could existwithout it. It is at least evident, that in a Country situated like the UnitedStates, with an infinite fund of resources yet to be unfolded, every farthingof foreign capital, which is laid out in internal ameliorations, and inindustrious establishments of a permanent nature, is a precious acquisition.

     And whatever be the objects whichoriginally attract foreign Capital, when once introduced, it may be directedtowards any purpose of beneficial exertion, which is desired. And to detain it amongus, there can be no expedient so effectual as to enlarge the sphere, withinwhich it may be usefully employed: Though induced merely  [305]   with views to speculations in the funds, it may after-(995) wards be rendered subservient to the Interests of Agriculture,Commerce & Manufactures.  {226}

     But the attraction of foreign Capital forthe direct purpose of Manufactures ought not to be deemed a chimerialexpectation. There are already examples of it, as remarked in another place. Andthe examples, if the disposition be cultivated can hardly fail to multiply.There are also instances of another kind, which serve to strengthen theexpectation. Enterprises for improving the Public Communications, by cuttingcanals, opening the obstructions in Rivers and erecting bridges, have receivedvery material aid from the same source.

     When the Manufacturing Capitalist ofEurope shall advert to the many important advantages, which have beenintimated, in the Course of this report, he cannot but perceive very powerfulinducements to a transfer of himself and his Capital to the United States.Among the reflections, which a most interesting peculiarity of situation iscalculated to suggest, it cannot escape his observation, as a circumstance ofMoment in the calculation, that the progressive population and improvement ofthe United States, insure a continually increasing domestic demand for thefabrics which he shall produce, not to be affected by any external casualtiesor vicissitudes.

     But while there are Circumstancessufficiently strong to authorise a considerable degree of reliance on the aidof foreign Capital towards the attainment of the object in view, it issatisfactory to have good grounds of assurance, that there are domesticresources of themselves adequate to it. It happens, that there is a species ofCapital actually existing within the United States, which relieves from allinquietude on the score of want of Capital -- This is the funded Debt.

     The effect of a funded debt, as a speciesof Capital, has been Noticed upon a former Occasion; but a more particularelucidation of the point seems to be required by the stress which is here laidupon it. This shall accordingly be attempted.

     Public Funds answer the purpose ofCapital, from the estimation in which they are usually held by Monied men; andconsequently from the Ease and dispatch with which they can be turned intomoney. This capacity of prompt convertibility into money causes a transfer ofstock to be in a great number of {227} Cases equivalent to a payment in coin. And where it does nothappen to suit the party who is to receive, to accept a transfer of Stock, theparty who is to pay, is never at a loss to find elsewhere a purchaser of hisStock, who will furnish him in lieu of it, with the Coin of which he stands inneed. Hence in a sound and settled state of the public funds, a manpossessed  [306]  of a sum in them can embrace any schemeof business, which offers, with as much confidence as if he were possessed ofan equal sum in Coin.

     This operation of public funds as capitalis too obvious to be denied; but it is objected to the Idea of their operatingas an augmentation of the Capital ofthe community, that they serve to occasion the destruction of some other capital to an equal amount.

     (996) The Capital which alone theycan be supposed to destroy must consist of -- The annual revenue, which isapplied to the payment of Interest on the debt, and to the gradual redemptionof the principal The amount of the Coin, which is employed in circulating thefunds, or, in other words, in effecting the different alienations which theyundergo.

     But the following appears to be the trueand accurate view of this matter.

     lst. As to the point of the Annual Revenuerequisite for Payment of interest and redemption of principal.

     As a determinate proportion will tend toperspicuity in the reasoning, let it be supposed that the annual revenue to beapplied, corresponding with the modification of the 6 per Cent stock of theUnited States, is in the ratio of eight upon the hundred, that is in the firstinstance six on Account of interest, and two on account of Principal.

     Thus far it is evident, that the Capitaldestroyed to the capital created, would bear no greater proportion, than 8 to100. There would be withdrawn from the total mass of other capitals a sum ofeight dollars to be paid to the public creditor; while he would be possessed ofa sum of One Hundred dollars, ready to be applied to any purpose, to beembarked in {228}  any enterprise,which might appear to him eligible. Here then the Augmentation of Capital, or the excess of that which is produced,beyond that which is destroyed is equal to Ninety two dollars. To thisconclusion, it may be objected, that the sum of Eight dollars is to bewithdrawn annually, until the whole hundred is extinguished, and it may beinferred, that in process of time a capital will be destroyed equal to thatwhich is at first created.

     But it is nevertheless true, that duringthe whole of the interval, between the creation of the Capital of 100 dollars,and its reduction to a sum not greater than that of the annual revenueappropriated to its redemption -- there will be a greater active capital inexistence than if no debt had been Contracted. The sum drawn from otherCapitals in any one year will notexceed eight dollars; but there will be atevery instant of time during thewhole period, in question a sum corresponding with so much of the principal, as remains unredeemed, in the hands of [307]  some person, orother, employed, or ready to be employed in some profitable undertaking. Therewill therefore constantly be more capital, in capacity to be employed, thancapital taken from employment. The excess for the first year has been stated tobe Ninety two dollars; it will diminish yearly, but there always will be anexcess, until the principal of the debt is brought to a level with the redeeming annuity, that is, in the case which has been assumed by way ofexample, to eight dollars. Thereality of this excess becomes palpable, if it be supposed, as often happens,that the citizen of a foreign Country imports into the United States 100dollars for the purchase of an equal sum of public debt. Here is an absoluteaugmentation of the mass of Circulating Coin to the extent of (997) 100dollars. At the end of a year the foreigner is presumed to draw back eightdollars on account of his Principal and Interest, but he still leaves, Ninetytwo of his original Deposit in circulation, as he in like manner leaves Eightyfour at the end of the second year, drawing back then also the annuity of EightDollars: And thus the Matter proceeds; The capital left in circulationdiminishing each year, and coming nearer to {229}  the level of the annuity drawnback. There are however somedifferences in the ultimate operation of the part of the debt, which ispurchased by foreigners, and that which remains in the hands of citizens. Butthe general effect in each case, though in different degrees, is to add to theactive capital of the Country.

     Hitherto the reasoning has proceeded on aconcession of the position, that there is a destruction of some other capital,to the extent of the annuity appropriated to the payment of the Interest andthe redemption of the principal of the debt but in this, too much has beenconceded. There is at most a temporary transfer of some other capital, to theamount of the Annuity, from those who pay to the Creditor who receives; whichhe again restores to the circulation to resume the offices of a capital. Thishe does either immediately by employing the money in some branch of Industry,or mediately by lending it to some other person, who does so employ it or byspending it on his own maintenance. In either supposition there is nodestruction of capital, there is nothing more than a suspension of its motionfor a time; that is, while it is passing from the hands of those who pay intothe Public coffers, & thence through the public Creditor into some otherChannel of circulation. When the payments of interest are periodical and quickand made by instrumentality of Banks the diversion or suspension of capital mayalmost be denominated momentary. Hence the deduction on this Account is farless, than it at first sight appears to be.

     There is evidently, as far as regards theannuity no destruction  [308]  nor transfer of any other Capital, thanthat portion of the income of each individual, which goes to make up theAnnuity. The land which furnishes the Farmer with the sum which he is tocontribute remains the same; and the like may be observed of other Capitals.Indeed as far as the Tax, which is the object of contribution (as frequentlyhappens, when it does) not oppress, by its weight may have been a Motive to greater exertion in any occupation; itmay even serve to encrease the contributory Capital: This idea is not withoutimportance in the general view of the subject.  {230}

     It remains to see, what further deductionought to be made from the capital which is created, by the existence of theDebt; on account of the coin, which is employed in its circulation. This issusceptible of much less precise calculation, than the Article which has beenjust discussed. It is impossible to say what proportion of coin is necessary tocarry on the alienations which any species of property usually undergoes. Thequantity indeed varies according to circumstances. But it (998) maystill without hesitation be pronounced, from the quickness of the rotation, orrather of the transitions, that the mediumof circulation always bears but a small proportion to the amount of the property circulated. And it is thencesatisfactorily deducible, that the coin employed in the Negociations of thefunds and which serves to give them activity, as capital, is incomparably lessthan the sum of the debt negotiated for the purposes of business.

     It ought not, however, to be omitted, thatthe negotiation of the funds becomes itself a distinct business; which employs,and by employing diverts a portion of the circulating coin from other pursuits.But making due allowance for this circumstance there is no reason to conclude,that the effect of the diversion of coin in the whole operation bears anyconsiderable proportion to the amount of the Capital to which it givesactivity. The sum of the debt in circulation is continually at the Command, ofany useful enterprise -- the coin itself which circulates it, is never morethan momentarily suspended from its ordinary functions. It experiences anincessant and rapid flux and reflux to and from the Channels of industry tothose of speculations in the funds.

     There are strong circumstances inconfirmation of this Theory. The force of Monied Capital which has beendisplayed in Great Britain, and the height to which every species of industryhas grown up under it, defy a solution from the quantity of coin which thatkingdom has ever possessed. Accordingly it has been Coeval with its fundingsystem, the prevailing opinion of the men of business, and of the generality ofthe most sagacious theorists of that country, that the operation of the publicfunds  {231} as capital hascontributed to the effect in [309]  question. Amongourselves appearances thus far favour the same Conclusion. Industry in generalseems to have been reanimated. There are symptoms indicating an extention ofour Commerce. Our navigation has certainly of late had a Considerable spring,and there appears to be in many parts of the Union a command of capital, whichtill lately, since the revolution at least, was unknown. But it is at the sametime to be acknowledged, that other circumstances have concurred, (and in agreat degree) in producing the present state of things, and that theappearances are not yet sufficiently decisive, to be intirely relied upon.

     In the question under discussion, it isimportant to distinguish between an absoluteincrease of Capital, or an accession of real wealth, and an artificial increase of Capital, as anengine of business, or as an instrument of industry and Commerce. In the firstsense, a funded debt has no pretensions to being deemed an increase of Capital;in the last, it has pretensions which are not easy to be controverted. Of asimilar nature is bank credit and in an inferior degree, every species ofprivate credit.

     But though a funded debt is not in the firstinstance, an absolute increase of Capital, or an augmentation of real wealth;yet by serving as a New power in the operation of industry, it has within (999)certain bounds a tendency to increase the real wealth of a Community, inlike manner as money borrowed by a thrifty farmer, to be laid out in theimprovement of his farm may, in the end, add to his Stock of real riches.

     There are respectable individuals, whofrom a just aversion to an accumulation of Public debt, are unwilling toconcede to it any kind of utility, who can discern no good to alleviate the illwith which they suppose it pregnant; who cannot be persuaded that it ought inany sense to be viewed as an increase of capital lest it should be inferred,that the more debt the more capital, the greater the burthens the greater theblessings of the community.

     But it interests the public Councils toestimate every object as it truly is; to appreciate how far the good in anymeasure is compensated by the ill; or the ill by the good, Either of them isseldom unmixed.  {232}

     Neither will it follow, that anaccumulation of debt is desireable, because a certain degree of it operates ascapital. There may be a plethora in the political, as in the Natural body;There may be a state of things in which any such artificial capital isunnecessary. The debt too may be swelled to such a size, as that the greatestpart of it may cease to be useful as a Capital, serving only to pamper thedissipation of idle and dissolute individuals: as that the sums required to paythe  [310]  Interest upon it may become oppressive,and beyond the means, which a government can employ, consistently with itstranquility, to raise them, as that the resources of taxation, to face the debt,may have been strained too far to admit of extensions adequate to exigencies,which regard the public safety.

     Where this critical point is, cannot bepronounced, but it is impossible to believe, that there is not such a point.

     And as the vicissitudes of Nations beget aperpetual tendency to the accumulation of debt, there ought to be in everygovernment a perpetual, anxious and unceasing effort to reduce that, which atany time exists, as fast as shall be practicable consistently with integrityand good faith.

     Reasonings on a subject comprehendingideas so abstract and complex, so little reducible to precise calculation asthose which enter into the question just discussed, are always attended with adanger of runing into fallacies. Due allowance ought therefore to be made forthis possibility. But as far as the Nature of the subject admits of it, thereappears to be satisfactory ground for a belief, that the public funds operateas a resource of capital to the Citizens of the United States, and, if they area resource at all, it is an extensive one....  {233 omitted; 234}

     There remains to be noticed an objectionto the encouragement of manufactures, of a nature different from those whichquestion the probability of success. This is derived from its supposed tendencyto give a monopoly of advantages to particular classes at the expence of therest of the community, who, it is affirmed, would be able to procure therequisite supplies of manufactured articles on better terms from foreigners,than from  {235} our own Citizens,and who it is alledged, are reduced to a necessity of paying an enhanced pricefor whatever they want, by every measure, which obstructs the free competitionof foreign commodities.

     It is not an unreasonable supposition,that measures, which serve to abridge the free competition of foreign Articles,have a tendency to occasion an enhancement of prices and it is not to be deniedthat such is the effect in a number of Cases; but the fact does not uniformlycorrespond with the theory. A reduction of prices has in several instancesimmediately succeeded the establishment of a domestic manufacture. Whether itbe that foreign Manufacturers endeavour to supplant by underselling our own, orwhatever else be the cause, the effect has been such as is stated, and thereverse of what might have been expected.

     But though it were true, that theimmediate and certain effect of regulations controuling the competition offoreign with domestic fabrics was an increase of price, it is universally true,that the contrary  [311]  is the ultimate effect with everysuccessful manufacture. When a domestic manufacture has attained to perfection,and has engaged in the prosecution of it a competent number of Persons, itinvariably becomes cheaper. Being free from the heavy charges, which attend theimportation of foreign commodities, it can be afforded, and accordingly seldomor never fails to be sold Cheaper, in process of time, than was the foreignArticle for which it is a substitute. The internal competition, which takesplace, soon does away every thing like Monopoly, and by degrees reduces theprice of the Article to the minimum ofa reasonable profit on the Capital employed. This accords with (1002) thereason of the thing and with experience.

     Whence it follows, that it is the interestof a community with a view to eventual and permanent economy, to encourage thegrowth of manufactures. In a national view, a temporary enhancement of pricemust always be well compensated by a permanent reduction of it.

     It is a reflection, which may withpropriety be indulged here, that this eventual diminution of the prices ofmanufactured Articles; which is the result of internal manufacturingestablishments, {236} has a direct and very important tendency to benefitagriculture. It enables the farmer, to procure with a smaller quantity of hislabour, the manufactured produce of which he stands in need, and consequentlyincreases the value of his income and property.

     The objections which are commonly made tothe expediency of encouraging, and to the probability of succeeding inmanufacturing pursuits, in the United states, having now been discussed; theConsiderations which have appeared in the Course of the discussion,recommending that species of industry to the patronage of the Government, willbe materially strengthened by a few general and some particular topics, whichhave been naturally reserved for subsequent Notice.

     I There seems to be a moral certainty,that the trade of a country which is both manufacturing and Agricultural willbe more lucrative and prosperous, than that of a Country, which is, merelyAgricultural.

     One reason for this is found in thatgeneral effort of nations (which has been already mentioned) to procure fromtheir own soils, the articles of prime necessity requisite to their ownconsumption and use; and which serves to render their demand for a foreignsupply of such articles in a great degree occasional and contingent. Hence,while the necessities of nations exclusively devoted to Agriculture, for thefabrics of manufacturing states are constant and regular, the wants of thelatter for the products of the former, are liable to very  [312]  considerable fluctuations and interruptions. The greatinequalities resulting from difference of seasons, have been elsewhereremarked: This uniformity of demand on one side, and unsteadiness of it, on theother, must necessarily have a tendency to cause the general course of theexchange of commodities between the parties to turn to the disadvantage of themerely agricultural States. Peculiarity of situation, a climate and soiladapted to the production of peculiar commodities, may, sometimes, contradictthe rule; but there is every reason to believe that it will be found in theMain, a just one.

     Another circumstance which gives a superiority of commercialadvantages to states, that manufacture as well as cultivate, {237}consists inthe more numerous attractions, which a more diversified market offers toforeign Customers, and greater scope, which it affords to mercantileenterprise. It is a position of indisputable truth in Commerce, depending tooon very obvious reasons, that the greatest resort will ever be to those martswhere commodities, while equally abundant, are most various. Each difference ofkind holds out (1003) an additional inducement. And it is a position notless clear, that the field of enterprise must be enlarged to the Merchants of aCountry, in proportion to the variety as well as the abundance of commoditieswhich they find at home for exportation to foreign Markets.

     A third circumstance, perhaps not inferiorto either of the other two, conferring the superiority which has been statedhas relation to the stagnations of demand for certain commodities which at sometime or other interfere more or less with the sale of all. The Nation which canbring to Market, but few articles is likely to be more quickly and sensiblyaffected by such stagnations, than one, which is always possessed of a greatvariety of commodities. The former frequently finds too great a proportion ofits stock of materials, for sale or exchange, lying on hand -- or is obliged tomake injurious sacrifices to supply its wants of foreign articles, which are Numerous and urgent, inproportion to the smallness of the number of its own. The latter commonly findsitself indemnified, by the high prices of some articles, for the low prices ofothers -- and the Prompt and advantageous sale of those articles which are indemand enables its merchant the better to wait for a favorable change, inrespect to those which are not. There is ground to believe, that a differenceof situation, in this particular, has immensely different effects upon thewealth and prosperity of Nations.

     From these circumstances collectively, twoimportant inferences are to be drawn, one, that there is always a higherprobability of a favorable balance of Trade, in regard to countries in which (1004)manufactures founded on the basis of a thriving Agriculture flourish, thanin  [313]  regard to those, which are confined wholly or almost whollyto Agriculture; the other (which is also a consequence of the first) thatcountries of the former description {238} are likely to possess more pecuniarywealth, or money, than those of the latter.

     Facts appear to correspond with thisconclusion. The importations of manufactured supplies seem invariably to drainthe merely Agricultural people of their wealth. Let the situation of themanufauring [sic] countries of Europe be compared in this particular, with thatof Countries which only cultivate, and the disparity will be striking. Othercauses, it is true, help to Account for this disparity between some of them;and among these causes, the relative state of Agriculture; but between othersof them, the most prominent circumstance of dissimilitude arises from theComparative state of Manufactures. In corroboration of the same idea, it oughtnot to escape remark, that the West India Islands, the soils of which are themost fertile, and the Nation, which in the greatest degree supplies the rest ofthe world, with the precious metals, exchange to a loss with almost every otherCountry.

     As far as experience at home may guide, itwill lead to the same conclusion. Previous to the revolution, the quantity of coin,possessed by the colonies, which now compose the United States, appeared, to beinadequate to their circulation; and their debt to GreatBritain wasprogressive. Since the Revolution, the States, in which manufactures have mostincreased, have recovered fastest from the injuries of the late War, and aboundmost in pecuniary resources.

     It ought to be admitted, however in thisas in the preceding case, that causes irrelative to the state of manufacturesaccount, in a degree, for the Phoenomena remarked. The continual progress ofnew settlements has a natural tendency to occasion an unfavorable balance ofTrade; though it indemnifies for the inconvenience, by that increase of thenational capital which flows from the conversion of waste into improved lands:And the different degrees of external commerce, which are carried on by thedifferent States, may make material differences in the comparative state oftheir wealth. The first circumstance has reference to the deficiency of coinand the increase of debt previous to the revolution; the last to the advantageswhich the most manufacturing states appear to have enjoyed, over the others,since the termination of the late War. {239}

     But the uniform appearance of an abundanceof specie, as the concomitant of a flourishing state of manufactures and of thereverse, where they do not prevail, afford a strong presumption of theirfavourable operation upon the wealth of a Country.

     Not only the wealth; but the independenceand security of a  [314]  Country, appear to be materiallyconnected with the prosperity of manufactures. Every nation, with a view tothose great objects, ought to endeavour to possess within itself all theessentials of national supply. These comprise the means ofSubsistence habitation clothing and defence.

     The possession of these is necessary tothe perfection of the body politic, to the safety as well as to the welfare ofthe society; the want of either, is the want of an important organ of politicallife and Motion; and in the various crises which await a state, it mustseverely feel the effects of any such deficiency. The extreme embarrassments ofthe United States during the late War, from an incapacity of supplyingthemselves, are still matter of keen recollection: A future war might beexpected again to exemplify the mischiefs and dangers of a situation, to whichthat incapacity is still in too great a degree applicable, unless changed bytimely and vigorous exertion. To effect this change as fast as shall beprudent, merits all the attention and all the Zeal of our Public Councils; 'tisthe next great work to be accomplished.

     The want of a Navy to protect our externalcommerce, as long as it shall Continue, must render it a peculiarly precariousreliance, for the supply of essential articles, and must serve to strengthenprodigiously the arguments in favour of manufactures.

     To these general Considerations are addedsome of a more particular nature. {234}

     Our distance from Europe, the greatfountain of manufactured supply, subjects us in the existing state of things,to inconvenience and loss in two Ways.

     The bulkiness of those commodities whichare the chief productions of the soil, necessarily imposes very heavy chargeson their transportation, to distant markets. These charges, in the Cases, inwhich the nations, to whom our products are sent, maintain a Competition in thesupply of their own markets, (1005) principally {240} fall upon us, and form material deductions from  primitive value of the articlesfurnished. The charges on manufactured supplies, brought from Europe aregreatly enhanced by the same circumstance of distance. These charges, again, inthe cases in which our own industry maintains no competition, in our ownmarkets, also principally fall upon us; and are an additional cause ofextraordinary deduction from the primitive value of our own products; thesebeing the materials of exchange for the foreign fabrics, which we consume.

     The equality and moderation of individualproperty and the growing settlements of new districts, occasion in this countryan unusual demand for coarse manufactures; The charges of which being  [315]  greater in proportion to their greater bulk augment thedisadvantage, which has been just described.

     As in most countries domestic suppliesmaintain a very considerable competition with such foreign productions of thesoil, as are imported for sale; if the extensive establishment of Manufactoriesin the United states does not create a similar competition in respect tomanufactured articles, it appears to be clearly deducible, from theConsiderations which have been mentioned, that they must sustain a double lossin their exchanges with foreign Nations; strongly conducive to an unfavorablebalance of Trade, and very prejudicial to their Interests.

     These disadvantages press with no smallweight, on the landed interest of the Country. In seasons of peace, they causea serious deduction from the intrinsic value of the products of the soil. Inthe time of a War, which shou'd either involve ourselves, or another nation,possessing a Considerable share of our carrying trade, the charges on thetransportation of our commodities, bulky as most of them are, could hardly failto prove a grievous burthen to the farmer; while obliged to depend in so greatdegree as he now does, upon foreign markets for the vent of the surplus of hislabour.

     As far as the prosperity of the Fisheriesof the United states is impeded by the want of an adequate market, there arisesanother special reason for desiring the extension of manufactures. Besides thefish, which in many places, would be likely to make, {241} a part of thesubsistence of the persons employed; it is known that the oils, bones and skinsof marine animals, are of extensive use in various manufactures. Hence theprospect of an additional demand for the produce of the Fisheries.

     One more point of view only remains inwhich to Consider the expediency of encouraging manufactures in the Unitedstates.

     It is not uncommon to meet with an opinionthat though the promoting of manufactures may be the interest of a part of theUnion, it is contrary to that of another part. The Northern & southernregions are sometimes represented as having adverse interests in this respect.Those are called Manufacturing, these Agricultural states; and a species ofopposition is imagined to subsist between the Manufacturing and Agriculturalinterests.

     This idea of an opposition between thosetwo interests is the com- (1006) mon error of the early periods of everycountry, but experience gradually dissipates it. Indeed they are perceived sooften to succour and to befriend each other, that they come at length to beconsidered as one: a supposition which has been frequently abused and is notuniversally true. Particular encouragements of particular manufactures  [316]  may be of a Nature to sacrifice the interests of landholdersto those of manufacturers; But it is nevertheless a maxim well established byexperience, and generally acknowledged, where there has been sufficientexperience, that the aggregate prosperityof manufactures, and the aggregate prosperityof Agriculture are intimately connected. In the Course of the discussion whichhas had place, various weighty considerations have been adduced operating insupport of that maxim. Perhaps the superior steadiness of the demand of adomestic market for the surplus produce of the soil, is alone a convincingargument of its truth.

     Ideas of a contrariety of interestsbetween the Northern and southern regions of the Union, are in the Main asunfounded as they are mischievous. The diversity of Circumstances on which suchcontrariety is usually predicated, authorises a directly contrary conclusion.Mutual wants constitute one of the strongest links of political connection, andthe extent of these bears {242}  a natural proportionto the diversity in the means of mutual supply.

     Suggestions of an opposite complexion areever to be deplored, as unfriendly to the steady pursuit of one great commoncause, and to the perfect harmony of all the parts.

     In proportion as the mind is accustomed totrace the intimate connexion of interest, which subsists between all the partsof a Society united under the same government -- the infinite variety ofchannels which serve to Circulate the prosperity of each to and through therest -- in that proportion will it be little apt to be disturbed by solicitudesand Apprehensions which originate in local discriminations. It is a truth asimportant as it is agreeable, and one to which it is not easy to imagineexceptions, that every thing tending to establish substantial and permanent order, in the affairs of a Country, toincrease the total mass of industry and opulence, is ultimately beneficial toevery part of it. On the Credit of this great truth, an acquiescence may safelybe accorded, from every quarter, to all institutions & arrangements, whichpromise a confirmation of public order, and an augmentation of NationalResource.

     But there are more particularconsiderations which serve to fortify the idea, that the encouragement ofmanufactures is the interest of all parts of the Union. If the Northern andmiddle states should be the principal scenes of such establishments, they wouldimmediately benefit the more southern, by creating a demand for productions;some of which they have in common with the other states, and others of whichare either peculiar to them, or more abundant, or of better quality, thanelsewhere. These productions, principally are Timber,  [317]  flax,Hemp, Cotton, Wool, raw silk, Indigo, iron, lead, furs, hides, skins and coals.Of these articles Cotton & Indigo are peculiar to (1007) thesouthern states; as are hitherto Lead& Coal. Flax and Hemp are or may be raised in greater abundance there,than in the More Northern states; and the Wool of Virginia is said to be ofbetter quality than that of any other state: a Circumstance rendered the moreprobable by the reflection that Virginia embraces the  {243} same latitudes with the finest Wool Countries ofEurope. The Climate of the south is also better adapted to the production ofsilk.

     The extensive cultivation of Cotton canperhaps hardly be expected, but from the previous establishment of domesticManufactories of the Article; and the surest encouragement and vent, for theothers, would result from similar establishments in respect to them.

     If then, it satifactorily appears, that itis the Interest of the United states, generally, to encourage manufactures, itmerits particular attention, that there are circumstances, which Render thepresent a critical moment for entering with Zeal upon the important business.The effort cannot fail to be materially seconded by a considerable andencreasing influx of money, in consequence of foreign speculations in the funds-- and by the disorders, which exist in different parts of Europe.

     The first circumstance not onlyfacilitates the execution of manufacturing enterprises; but it indicates themas a necessary mean to turn the thing itself to advantage, and to prevent itsbeing eventually an evil. If useful employment be not found for the Money offoreigners brought to the country to be invested in purchasers of the publicdebt, it will quickly be reexported to defray the expence of an extraordinaryconsumption of foreign luxuries; and distressing drains of our specie mayhereafter be experienced to pay the interest and redeem the principal of thepurchased debt.

     This useful employment too ought to be ofa Nature to produce solid and permanent improvements. If the money merelyserves to give a temporary spring to foreign commerce; as it cannot procure newand lasting outlets for the products of the Country; there will be no real ordurable advantage gained. As far as it shall find its way in Agriculturalameliorations, in opening canals, and in similar improvements, it will beproductive of substantial utility. But there is reason to doubt, whether insuch channels it is likely to find sufficient employment, and still more whethermany of those who possess it, would be as readily attracted to objects of thisnature, as to manufacturing pursuits; {244} which bear greater analogy to those to which they are accustomed,and to the spirit generated by them.

[318]

     To open the one field, as well as theother, will at least secure a better prospect of useful employment, forwhatever accession of money, there has been or may be.

     There is at the present juncture a certainfermentation of mind, a certain activity of speculation and enterprise which ifproperly directed may be made subservient to useful purposes; but which if leftentirely to itself, may be attended with pernicious effects.

     The disturbed state of Europe, incliningits citizens to emigration, the requisite workmen, will be more easilyacquired, than at another time; and (1008) the effect of multiplying theopportunities of employment to those who emigrate, may be an increase of thenumber and extent of valuable acquisitions to the population arts and industryof the Country. To find pleasure in the calamities of other nations, would becriminal; but to benefit ourselves, by opening an asylum to those who suffer,in consequence of them, is as justifiable as it is politic. ...

[Here begins a discussion of theseven different methods of protection; p. 1008 in the Annals of Congress.]{Page numbering changes to Works of Hamilton}

 

     A full view having now been taken of theinducements to the promotion of manufactures in the United States, accompaniedwith an examination of the principal objections which are commonly urged inopposition, it is proper, in the next place, to consider the means by which itmay be effected, as introductory to a specification of the objects, which, inthe present state of things, appear the most fit to be encouraged, and of theparticular measures which it may be advisable to adopt, in respect to each.

     In order to a better judgment of the meansproper to be resorted to by the United States, it will be of use to advert tothose which have been employed with success in other countries. The principalof these are:

 

     1.Protecting duties -- or duties on those foreign articles which are the rivalsof the domestic ones intended to be encouraged.

     Duties of this nature evidently amount toa virtual bounty

{245}

     on the domestic fabrics; since, byenhancing the charges on foreign articles, they enable the, nationalmanufacturers to undersell ;all their foreign competitors. The propriety ofthis species of encouragement need not be dwelt upon, as it is not only a clearresult from tile numerous topics which have been suggested, but is sanctionedby the laws of the United States, in a variety of instances; it his theadditional recommendation of being a resource of revenue. Indeed, all tileduties imposed on imported articles, though with an exclusive view to revenue,have the effect, in contemplation, and, except where they fill on rawmaterials, wear a beneficent aspect towards the manufacturers of the country.

 

     2.Prohibitions of rival articles, or duties equivalent to prohibitions.

     This is another and an efficacious mean ofencouraging national manufactures; but, in general, it is only fit to beemployed when a manufacture has made such progress, and is in so many hands, asto insure a due competition, and an adequate supply on reasonable terms. Ofduties equivalent to prohibitions, there are examples in the laws of the UnitedStates; and there are other cases, to which the principle may be advantageouslyextended, but they are not numerous.

     Considering a monopoly of the domesticmarket to its own manufacturers as the reigning policy of manufacturingnations, a similar policy, on the part of the United States, in every proper instance,is dictated, it might almost be said, by the principles of distributivejustice; certainly, by the duty of endeavoring to secure to their own citizensa reciprocity of advantages.

 

     3.Prohibitions of the exportation of the Materials of Manufactures.

     The desire ofsecuring a cheap and plentiful supply for the national work- (1009) men,and where the article is either peculiar to tile country, or of peculiarquality there, the jealousy of enabling foreign workmen to rival those of thenation with its own materials, are the leading motives to this species ofregulation. It  {246}  ought not to be affirmed, that it is inno instance proper; but is, certainly, one which ought to be adopted with greatcircumspection, and only in very plain cases. It is seen at once, that itsimmediate operation is to abridge the demand, and keep down the price of theproduce of some other branch of industry -generally speaking, of agriculture-tothe prejudice of those who carry it on; and though, if it be really essentialto the prosperity of any very important national manufacture, it may happenthat those who are injured, in the first instance, may, be, eventually,indemnified by the superior steadiness of an extensive domestic market,depending on that prosperity; yet, in a matter in which there is so much roomfor nice and difficult combinations, in which, such opposite considerationscombat each other, prudence seems to dictate that the expedient in questionought to be indulged with a sparing hand.

 

     4. Pecuniary bounties.

     This has been found one of the mostefficacious means of encouraging manufactures, and is, in some views, the best.Though it has not yet been practised upon by the Government of the UnitedStates (unless the allowance on the expiration of dried and pickled fish andsalted meat could be considered as a bounty), and though it is less favored bypublic opinion than some other modes, its advantages are these:

     1. It is a species of encouragement morepositive and direct than any other, and, for that very reason, has a more immediatetendency to stimulate and uphold new enterprises, increasing the chances ofprofit, and diminishing the risks of loss, in the first attempts.

     2. It avoids the inconvenience of atemporary augmentation of price, which is incident to some other modes; or itproduces it to, a less degree, either by making no addition to the charges onthe rival foreign article, as in the case of protecting duties, or by making asmaller addition. The first happens when the fund for the bounty is derivedfrom a different object (which may or may not increase the price of some otherarticle, according

{247}

     to the nature of that object), the second,when the fund is derived from the same, or a similar object, of foreignmanufacture. One per cent. duty on the foreign article, converted into a bountyon the domestic, will have an equal effect with a duty of two per cent.,exclusive of such bounty; and the price of the foreign commodity is liable tobe raised, in the one case, in the proportion of one per cent.; in the other inthat of two per cent. Indeed the bounty, when drawn from another source, iscalculated to promote a reduction of price; because, without laying any newcharge on the foreign article, it serves to introduce a competition with it,and to increase the total quantity of the article in the market.

     3. Bounties have not, like high protectingduties, a tendency to produce scarcity. An in- (1010) crease of price isnot always the immediate, though, where the progress of a domestic manufacturedoes not counteract a rise, it is, commonly, the ultimate effect of anadditional duty. In the interval between the laying of the duty and theproportional increase of price, it may discourage importation, by interferingwith the profits to be expected from the sale of the article.

     4. Bounties are, sometimes, not only thebest, but the only proper expedient for uniting the encouragement of a newobject of agriculture with that of a new object of manufacture. It is theinterest of the farmer to have the production of the raw material promoted bycounteracting the interference of the foreign material of the same kind. It isthe interest of the manufacturer to have the material abundant and cheap. If,prior to the domestic production of the material, in sufficient quantity tosupply the manufacturer on good terms, a duty be paid upon the importation ofit from abroad, with a view to promote the raising of it at home, the interestboth of the farmer and manufacturer will be disserved. By either destroying therequisite supply, or raising the price of the article beyond whit can beafforded to be given for it by the conductor of an infant manufacture, it isabandoned or fails, and there being no domestic manufactories to create ademand for the raw material, which is raised by the farmer, it is in vain thatthe competition of the like foreign article may have been destroyed.  {248}

     It cannot escape notice, that a duty uponthe importation of an article can no otherwise aid the domestic production ofit, than by giving the latter greater advantages in the home market. It canhave no influence upon the advantageous sale of the article produced in foreignmarkets -- no tendency, therefore, to promote its exportation.

     The true way to conciliate these two interestsis to lay a duty on foreign manufactures of the material, the growth of whichis desired to be encouraged, and to apply the produce of that duty, by way ofbounty, either upon the production of the material itself, or upon itsmanufacture at home, or upon both. In this disposition of the thing, themanufacturer commences his enterprise under every advantage which isattainable, as to quantity or price of the raw material; and the farmer, if thebounty be immediately to him, is enabled by it to enter into a successfulcompetition with the foreign material. If the bounty be to the manufacturer, onso much of the domestic material as he consumes, the operation is nearly thesame; he has a motive of interest to prefer the domestic commodity, if of equalquality, even at a higher price than the foreign, so long as the difference ofprice is any thing short of the bounty which is allowed upon the article.

     Except the simple and ordinary kinds ofhousehold manufacture, or those for which there are very commanding localadvantages, pecuniary bounties are, in most cases, indispensable to theintroduction of a new branch. A stimulus and a support, not less powerful anddirect, is, generally speaking, essential to the overcoming of the obstacleswhich arise from the competitions of superior- (1011) and maturityelsewhere. Bounties are especially essential in regard to articles upon whichthose foreigners, who have been accustomed to supply a country, are in thepractice of granting them.

     The continuance of bounties onmanufactures long established, must almost always be of questionable policy:because a presumption would arise, in every such case, that there were naturaland inherent impediments to success. But, in new undertakings, they are asjustifiable as they are oftentimes necessary. {249}

     There is a degree of prejudice againstbounties, from an appearance of giving away the public money without allimmediate consideration, and from a supposition that they serve to enrich particularclasses, at the expense of the community.

     But neither of these sources of dislikewill bear a serious examination. There is no purpose to which public money canbe more beneficially applied, than to the acquisition of a new and usefulbranch of industry; no consideration more valuable, than a permanent additionto the general stock of productive labor.

     As to the second source of objections itequally lies against other modes of encouragement, which are admitted to beeligible. As often as a duty upon a foreign article makes an addition to itsprice, it causes an extra expense to the community, for the benefit of thedomestic manufacturer. A bounty does no more. But it is the interest of thesociety, in each case, to submit to the temporary expense-which is more thancompensated by all increase of industry and wealth; by an augmentation ofresources and independence; and by the circumstance of eventual cheapness,which has been noticed in another place.

     It would deserve attention, however, inthe employment of this species of encouragement in the United States, as areason for moderating the degree of it in the instances in which it might bedeemed eligible, that the great distance of this country- from Europe imposesvery heavy charges on all the fabrics which are brought from thence, amountingto from fifteen to thirty per cent. oil their value, according to their bulk.

     A question has been made concerning theconstitutional right of the Government of the United States to apply thisspecies of encouragement; but there is certainty no good foundation for such aquestion. The National Legislature has express authority “to lay and collecttaxes, duties, imposts, and excises, to pay the debts, and provide for thecommon defence (1012) and general welfare,” with no other qualificationsthan that "all duties, imposts and excises, shall be uniform throughoutthe United States; and that no capitation or other direct tax shall be laid,unless in proportion to numbers, ascertained by a census or enumeration, {250}  taken on the principles prescribed in theconstitution," and that "no tax or duty shall be laid on articlesexported from any State."

     These three qualifications excepted, thepower to raise money is plenary and indefinite, and the objects to which it maybe appropriated, are no less comprehensive thin the payment of the publicdebts, and the providing for the common defence and general welfare. The terms"general welfare" were doubtless intended to signify more than wasexpressed or imported in those which preceded; otherwise, numerous exigenciesincident to the affairs of a nation would have been left without a provision.The phrase is as comprehensive as any that could have been used; because it wasnot fit that the constitutional authority of the Union to appropriate itsrevenues should have been restricted within narrower limits than the"general welfare;" and because this necessarily embraces a vastvariety of particulars, which are susceptible neither of specification nor ofdefinition.

     It is, therefore, of necessity, left tothe discretion of the National Legislature to pronounce upon the objects whichconcern the general welfare, and for which, under that description, anappropriation of money is requisite and proper. And there seems to be no roomfor a doubt, that whatever concerns the general interests of learning, ofagriculture, of manufactures, and of commerce, are within the sphere of thenational councils, as far as regards an application of money.

     The only qualification of the generalityof the phrase in question, which seems to be admissible, is this: That theobject, to which an appropriation of money is to be made, be general, and notlocal; its operation extending, in fact, or by possibility, throughout theUnion, and not being confined to a particular spot.

     No objection ought to arise to thisconstruction, from a supposition that it would imply a power to do whateverelse should appear to Congress conducive to the general welfare. A power. to appropriatemoney with this latitude, which is granted, too, in express terms, would notcarry a power to do any other thing {251}   not authorizedin the constitution, either expressly or by fair implication.

 

     5.Premiums

     These are of a nature allied to bounties,though distinguishable from them in some important features.

     Bounties are applicable to the wholequantity of an article produced, or manufactured, or exported, and involve acorrespondent expense. Premiums serve to reward some particular excellence orsuperiority, some extraordinary exertion or skill, and are dispensed only in asmall number of cases. But their effect is to stimulate general effort;contrived so as to be both honorary and lucrative, they address themselves todifferent passions – touching the chords, as well of emulation as of interest.They are, accordingly, a very economical mean of exciting the enterprise of awhole community.

     There are various societies, in differentcountries, whose object is the dispensation of premiums for the encouragementof agriculture, arts, manufactures, and commerce; and though they are, for themost part, voluntary associations, with comparatively slender funds, theirutility has been immense. Much his been done, by this mean, in Great Britain.Scotland, in particular, owes, materially to it, a prodigious amelioration ofcondition. From a similar establishment in the United States, supplied andsupported by the Government of the Union, vast benefits might, reasonably, beexpected. (1013) Some further ideas, on this head, shall, accordingly,be submitted, in the conclusion of this report.

 

     6.The exemption of the materials of manufactures from duty.

     The policy of that exemption, as a generalrule, particularly in reference to new establishments, is obvious. It carthardly ever be advisable to add the obstructions of fiscal burthens to thedifficulties which naturally embarrass a new manufacture; and where it ismatured, and in condition to become an object of revenue, it is, generallyspeaking, better that the fabric, than the material, should be the subject oftaxation. Ideas of proportion {252} between the quantum of the tax and the value of the article, canbe more easily adjusted in the former thin in the latter case. An argument forexemptions of this kind, in the United States, is to be derived from thepractice, as far as their necessities have permitted, of those nations whom weare to meet as competitors in our own and in foreign markets.

     There are, however, exceptions to it, ofwhich some examples will be given under the next head.

     The laws of the Union afford instances ofthe observance of the policy here recommended, but it will probably be foundadvisable to extend it to some other cases. Of a nature, hearing some affinityto that policy, is the regulation which exempts from duty the tools andimplements, as well as the books, clothes, and household furniture, of foreignartists, who come to reside in the United States-an advantage already securedto them by the laws of the Union, and which it is, in every view, proper tocontinue.

 

     7.Drawbacks of the duties which are imposed on the materials of manufactures.

     It hasalready been observed, as a general rule, that duties on those materials ought,with certain exceptions, to be forborne. Of these exceptions, three casesoccur, which may serve as examples. One, where the material is itself an objectof general or extensive consumption, and a fit and productive source ofrevenue. Another, where a manufacture of a simpler kind, the competition ofwhich, with a like domestic article, is desired to be restrained, partakes ofthe nature of a raw material, from being capable, by a farther process, to beconverted into a manufacture of a different kind, the introduction or growth ofwhich is desired to be encouraged. A third, where the material itself is aproduction of the country, and in sufficient abundance to furnish a cheap andplentiful supply to the national manufacturers.

     Under the first description comes thearticle of molasses. It is not only a fair object of revenue, but, being asweet, it is just  {253}  that the consumers of it should pay aduty as well as the consumers of sugar.

     Cottons and linens, in their white state,fall under the second description. A duty upon such as are imported is proper,to promote the domestic manufacture of similar articles, in the same state. Adrawback of that duty is proper, to encourage the printing and staining, athome, of those which are brought from abroad. When the first of these (1014)manufactures has attained sufficient maturity in a country to furnish afull supply for the second, theutility of the drawback ceases.

     The article of hemp either now does, ormay be expected soon to, exemplify the third case in the United States.

     Where duties on the materials ofmanufactures are not laid for the purpose of preventing a competition with somedomestic production, the same reasons which recommend, as a general rule, theexemption of those materials from duties, would recommend, as a like generalrule, the allowance of drawbacks in favor of the manufacturer. Accordingly, suchdrawbacks are familiar in countries which systematically pursue the business ofmanufactures; which furnishes an argument for the observance of a similar policyin the United States; and the idea has been adopted by the laws of the Union,in the instances of salt and molasses. It is believed that it will be foundadvantageous to extend it to some other articles.

 

     8.The encouragement of new intentions and discoveries at home, and of the introduction into the UnitedStates of such as may have been madein other countries; particularly, those which relate to machinery.

     This is among the most useful andunexceptionable of the aids which can be given to manufactures. The usual meansof that encouragement are pecuniary rewards, and, for a time, exclusiveprivileges. The first must be employed, according to the occasion, and theutility of the invention or discovery. For the last, so far w respects "authors and inventors," provision has been made by law. But it isdesirable, in regard to improvements, {254}   and secrets of extraordinary value, to be able toextend the same benefit to introducers, as well as authors and inventors; apolicy which has been practised with advantage in other countries. Here,however, as in some other cases, there is cause to regret, that the competencyof the authority of the National Government to the good which might be done, isnot without a question. Many aids might be given to industry, many internalimprovements of primary magnitude might be promoted, by an authority operatingthroughout the Union, which cannot be effected as well, if at all, by anauthority confirmed within the limits of a single State.

     But, if the Legislature of the Unioncannot do all the good that might be wished, it is, at least, desirable thatall may be done which is practicable. Means for promoting the introduction offoreign improvements, though less efficaciously them might be accomplished withmore adequate authority, will form a part of the plan intended to be submittedin the close of this report.

     It is customary with manufacturing nationsto prohibit, under severe penalties, the exportation of implements andmachines, which they have either invented or improved. There are alreadyobjects for a similar regulation in the United States; and others may beexpected to occur, from time to time. The adoption of it seems to be dictatedby the principle of reciprocity. Greater liberality, in such respects, mightbetter comport with the general (1015) spirit of the country; but aselfish and exclusive policy, in other quarters, will not always permit thefree indulgence of a spirit which would place us upon an unequal footing. Asfar as prohibitions tend to prevent foreign competitors from deriving thebenefit of the improvements made at home, they tend to increase the advantagesof those by whom they may have been introduced, and operate as an encouragementto exertion.

 

     9.Judicious regulations for the inspection of manufactured commodities.

     This is not among the least important ofthe means by which the prosperity of manufactures may be promoted. It is,indeed,  {255}   in many cases, one of the mostessential. Contributing to prevent frauds upon consumers at home, and exportersto foreign countries; to improve the quality, and preserve the character of thenational manufactures; it cannot fill to aid the expeditious and advantageoussale of them, and to serve as a guard against successful competition from otherquarters. The reputation of the flour and lumber of some States, and of thepotash of others, has been established by an attention to this point. And thelike good name might be procured for those articles, wheresoever produced, by ajudicious and uniform system of inspection, throughout the ports of the UnitedStates. A like system might also be extended with advantage to othercommodities.

 

     10.The facilitating of pecuniary remittances from place to place --

     Is a point of considerable moment to tradein general, and to manufactures in particular, by rendering more easy thepurchase of raw materials and provisions, and the payment for manufacturedsupplies. A general circulation of bank paper, which is to be expected from theinstitution lately established, will be a most valuable mean to this end. Butmuch good would also accrue from some additional provisions respecting inlandbills of exchange. If those drawn in one State, payable in another, were madenegotiable every where, and interest and damages allowed in case of protest, itwould greatly promote negotiations between the citizens of different States, byrendering them more secure, and with it the convenience and advantage of themerchants and manufacturers of each.

 

     11.The facilitating of the transportation of commodities.

     Improvements favoring this objectintimately concern all the domestic interests of a community; but they may,without impropriety, be mentioned as having, an important relation to manufactures.There is, perhaps, scarcely any thin" which has been better calculated toassist the manufacturers of Great Britain, than the melioration of the publicroads of that kingdom,  {256} andthe great progress which has been of late made in opening canals. Of theformer, the United States stand much in need; for the latter, they presentuncommon facilities.

     The symptoms of attention to theimprovement of inland navigation which have lately appeared in some quarters,must fill with pleasure every breast, warmed with a true zeal for theprosperity of the country. These examples, it is to be hoped, (1016) willstimulate the exertions of the Government and citizens of every State. Therecan certainly be no object more worthy of the cares of the local administrations;and it were to be wished that there was no doubt of the power of the NationalGovernment to lend its direct aid on a comprehensive plan. This is one of thoseimprovements which could be prosecuted with more efficacy by the whole, than byany part or parts of the Union. There are cases in which the general interestwill be in danger to be sacrificed to the collision of some supposed localinterests. Jealousies, in matters of this kind, are as apt to exist, as theyare apt to be erroneous.

     Thefollowing remarks are sufficiently judicious and pertinent to deserve a literalquotation:

     "Good roads, canals, and navigablerivers, by diminishing the expense of carriage, put the remote parts of acountry more nearly upon a level with those in the neighborhood of the town.They are, upon that account, the greatest of all improvements. They encouragethe cultivation of the remote, which must always be the most extensive circleof the country. They are advantageous to the town, by breaking down themonopoly of the country in its neighborhood. They are advantageous, even tothat part of the country. Though they introduce some rival commodities into theold market, they open many Dow markets to its produce. Monopoly, besides, is agreat enemy to good management, which can never be universally established, butin consequence of that free and universal competition, which forces every bodyto have recourse to it for the sake of self-defence. It is not more than fiftyyears ago that some of the counties in the neighborhood of London petitionedthe parliament against the extension of the turnpike roads into the remotercounties. Those  {257} remotercounties, they pretended, from the cheapness of labor, would be able to selltheir grass and corn cheaper in the London market than themselves, and theywould thereby reduce their rents, and ruin their cultivation. Their rents,however, have risen, and their cultivation has been improved since thattime."

     Specimens of a spirit similar to thatwhich governed the counties here spoken of, present themselves too frequentlyto the eye of an impartial observer, and render it a wish of patriotism, thatthe body in this country, in whose councils a local or partial spirit is itleast likely to predominate, were at liberty, to pursue and promote the generalinterest, in those instances in which there might be danger of the interferenceof such a spirit.

     The foregoing are the principal of themeans by which the growth of manufactures is ordinarily promoted. It is,however, not merely necessary that the measures of government, which have adirect view to manufactures, should be circulated to assist and protect them,but that those which only collaterally affect them in the general course of theadministration, should be guarded from any peculiar tendency to injure them.

     There are certain species of taxes, whichare apt to be oppressive to different parts of the community, and, among otherill effects, have a very unfriendly aspect towards manufactures. All poll orcapitation fixes are of this nature. They either proceed according to a fixedrate, which operates unequally and injuriously to the industrious poor, (1017)or they vest a discretion, in certain officers, to make estimates andassessments, which are necessarily vague, conjectural, and liable to abuse.They ought, therefore, to be abstained from in all but cases of distressingemergency.

     All such taxes (including all taxes onoccupations) which proceed according to the amount of capital supposed to beemployed in a business, or of profits supposed to be made in it, are,unavoidably hurtful to industry. It is in vain that the evil may be endeavoredto be mitigated, by leaving it, in the first instance, in the option of theparty to be taxed, to declare the amount of his capital or profits.

     Men engaged in any trade or business, havecommonly  {258}   weighty reasons to avoiddisclosures, which would expose, with any thing like accuracy, the real stateof their affairs. They most frequently find it better to risk oppression, thanto avail themselves of so inconvenient a refuge, and the consequence is, thatthey often suffer oppression.

     When the disclosure, too, if made, is notdefinitive, but controllable by the discretion, or, in other words, by thepassions and prejudices of the revenue officers, it is not only an ineffectualprotection, but the possibility of its being so, is an additional reason fornot resorting to it.

     Allowing to the public officers the mostequitable dispositions, yet, where they are to exercise a discretion withoutcertain data, they cannot fail to be often misled by appearances. The quantityof business which seems to be going on, is, in a vast number of cases, a verydeceitful criterion of the profits which are made; yet it is, perhaps, the bestthey can have, and it is the one on which they will most naturally rely. Abusiness, therefore, which may rather require aid from the Government, than bein a capacity to be contributory to it, mty find itself crushed by the mistakenconjectures of the assessors of taxes.

     Arbitrary taxes, under which denominationare comprised an those that leave the quantum of the tax to be raised on eachperson to the discretion of certain officers, are as contrary to the genius ofliberty as to the maxims of industry. In this light they have been viewed bythe most judicious observers on Government, who have bestowed upon them theseverest epithets of reprobation, as constituting one of the worst featuresusually to be met with in the practice of despotic governments.

     It is certain, at least, that such taxesare particularly inimical to the success of manufacturing industry, and oughtcarefully to be avoided by a government which desires to promote it.

     The great copiousness of the subject ofthis report has insensibly led to a more lengthy preliminary discussion thanwas originally contemplated or intended. It appeared proper to investigateprinciples, to consider objections, and to cn3eavor to establish the utility ofthe thing proposed to be encouraged, previous to a specification of the objectswhich might occur, as  {259}  meriting, or requiring encouragement,and of the measures which might be proper in respect to each. The first purposehaving been fulfilled, it remains to pursue the second.

    (1018) In the selection of objects, fivecircumstances seem entitled to particular attention. The capacity of thecountry to furnish the raw material; the degree in which the nature of themanufacture admits of a substitute for manual labor in machinery; the facilityof execution ; the extensiveness of the uses to which the article can beapplied; its subserviency to other interests, particularly the great one ofnational defence. There are, however, objects to which these circumstances arelittle applicable, which, for some special reasons, may have a claim toencouragement.

     A designation of the principal rawmaterial of which each manufacture is composed, will serve to introduce theremarks upon it; as, in the first place,

 

IRON.

 

     The manufactures of this article areentitled to pre-eminent rank. None are more essential in their kinds, nor soextensive in their uses. They constitute, in whole, or in part, the implementsor the materials, or both, of almost every useful occupation. Theirinstrumentality is every, where conspicuous.

     It is fortunate for the United States thatthey have peculiar advantages for deriving the full benefit of this mostvaluable material, and they have every motive to improve it with systematic care.It is to be found in various parts of the United States, in great abundance,and of almost every quality; and fuel, the chief instrument in manufacturingit, is both cheap and plenty. This particularly applies to charcoal; but thereare productive coal mines already in operation, and strong indications that thematerial is to be found in abundance, in a variety of   other places.

     The inquiries to which the subject of thisreport has led, have been answered with proofs that manufactories of iron, thoughgenerally understood to be extensive, are far more so than is commonlysupposed. The kinds in which the greatest {260}  progress has beenmade, have been mentioned in another place, and need not be repeated ; butthere is little doubt that every other kind, with due cultivation, will rapidlysucceed. It is worthy of remark, that several of the particular trades of whichit is the basis, are capable of being carried on without the aid of largecapitals.

     . Iron-works have greatly increased in theUnited States, and are prosecuted with much more advantage than formerly. Theaverage price, before the Revolution, was about sixty-four dollars per ton; atpresent, it is about eighty-a rise which is chiefly to be attributed to theincrease of manufactures of the material.

     The still further extension andmultiplication of such manufactures will have the double effect of promotingthe extraction of the metal itself, and of converting it to a greater number ofprofitable purposes.

     Those manufactures, too, unite, in agreater degree than almost any others, the several requisites which have beenmentioned as proper to be consulted in the selection of objects.

     The only further encouragement ofmanufactories of this article, the propriety of which may be considered asunquestionable, seems to be an (1019) increase of the duties on foreignrival commodities.

     Steel is a branch which has already made aconsiderable progress, and it is ascertained that some now enterprises, on amore extensive scale, have been lately set oil foot. The facility of carryingit to all extent which will supply all internal demands, and furnish aconsiderable surplus for exportation, cannot be doubted. The duty upon theimportation of this article, which is, at present, seventy-five cents per cwt.may, it is conceived, be safely and advantageously extended to onehundred cents, It is desirable, by decisive arrangements, to second the effortswhich are making in so very valuable a branch.

     The United States already, in a greatmeasure, supply themselves with nails and spikes. They are able, and oughtcertainly to do it, entirely. The first and most laborious operation, in thismanufacture, is performed by water-mills; and of the persons afterwardsemployed, a great proportion are boys, whose early  {261} habits of industry are of importance to the community,to the present support of their families, and to their own future comfort. Itis not less curious than true, that, in certain parts of the country, themaking of nails is an occasional family manufacture.

     The expediency of an additional duty onthese articles, is indicated by an important fact. About 1,800,000 pounds ofthem were imported into the United States, in the course of a year, ending the30th of September, 1790. A duty of two cents per pound would, it is presumable,speedily put an end to so considerable an importation. And it is, in everyview, proper that an end should be put to it.

     The manufacture of these articles, likethat Of some others, suffers from the carelessness and dishonesty of a part ofthose who carry it on. An inspection in certain cases might tend to correct theevil. It will deserve consideration whether a regulation of this sort cannot beapplied, without inconvenience, to the exportation of the articles, either toforeign countries, or from one State to another.

     The implements of husbandry are made inseveral States in great abundance. In many places, it is done by the commonblacksmiths. And there is no doubt that an ample supply for the whole countrycan, with great case, be procured among ourselves.

     Various kinds of edged tools for the useof mechanics are also made; and a considerable quantity of hollow wares, thoughthe business of castings has not yet attained the perfection which might bewished. It is, however, improving, and as there are respectable capitals, ingood hands, embarked in the prosecution of those branches of ironmanufactories, which are yet in their infancy, they may all be contemplated asobjects not difficult to be acquired.

     To insure the end, it seems equally safeand prudent, to extend the duty, ad valorem, upon all manufactures of iron, orof which iron is the article of chief value, to ten per cent.

     Fire-arms and other military weapons may,it is (1020)  conceived, beplaced, without inconvenience, in the class of  articles rated at {262} fifteen per cent. There are,already, manufactories of these articles, which only require the stimulus of acertain demand to render them adequate to the supply of the United States.

     It would, also, be a material aid tomanufactures of this nature, as well as a mean of public security, if provisionshould be made for an annual purchase of military weapons, of home manufacture,to a certain determinate extent, in order to the formation of arsenals; and toreplace, from time to time, such as should be drawn for use, so as always tohave in store the quantity of each kind which should be deemed a competentsupply.

     But it may, hereafter, deserve legislativeconsideration, whether manufactories of all the necessary weapons of war oughtnot to be established, on account of the government itself Such establishmentsare agreeable to the usual practice of nations, and that practice seems foundedon sufficient reason.

     There appears to be an improvidence inleaving these essential instruments of national defence to the casualspeculations of individual adventures resource which can less be relied upon,in this case, than in most others; the articles in question not being objectsof ordinary and indispensable private consumption or use. As a general rule,manufactories on the immediate account of government are to be avoided; butthis seems to be one of the few exceptions which that rule admits, depending onvery special reasons.

     Manufactures of steel, generally, or ofwhich steel is the article of chief value, may, with advantage, be placed inthe class of goods rated at seven and a half per cent. As manufactures of thiskind have not yet made any considerable progress, it is a reason for not ratingthem as high as those of iron: but, as this material is the basis of them, andas their extension is not less practicable than important, it is desirable topromote it by a somewhat higher duty than the present.

     A question arises, how far it might beexpedient to permit the importation of iron, in pigs and bars, free from duty.It would certainly be favorable to manufactures of the article; but the doubtis, whether it might not interfere with its production.

     Two circumstances, however, abate, if theydo not remove  {263} apprehension,on this score; one is, the considerable increase of price which has beenalready remarked, and which renders it probable that the free admission offoreign iron would Dot be inconsistent with an adequate profit to theproprietors of ironworks; the other is the augmentation of demand which wouldbe likely to attend the increase of manufactures of the article in consequenceof the additional encouragements proposed to be given. But cautionnevertheless, in a matter of this kind, is most advisable. The measuresuggested ought, perhaps, rather to be contemplated subject to the lights offurther experience, than immediately adopted.

     . . .

[omitted sections cover otherspecific commodities:

COPPER; LEAD; FOSSIL COAL; WOOD;SKINS; GRAIN; FLAX AND HEMP; COTTON; WOOL; SILK; GLASS; GUNPOWDER; PAPER;PRINTED BOOKS]

     . . .

{280}

REFINEDSUGARS AND CHOCOLATE

     Are among the number of extensive andprosperous domestic manufactures.

     Drawbacks of the duties upon the materialsof which they are respectively made, in cases of exportation, would have abeneficial influence upon the manufacture, and would conform to a precedentwhich has been already furnished in the instance of molasses, on theexportation of distilled spirits.

     Cocoa, the raw material, now pays a dutyof one cent per pound, while chocolate, which is a prevailing and very simplemanufacture, is comprised in the mass of articles rated at no more than fiveper cent.

     There would appear to be a propriety inencouraging the manufacture by a somewhat higher duty on its foreign rival,than is paid on the raw material. Two cents per pound on imported chocolate,would, it is presumed, be without inconvenience.

    

     (1032) The foregoing heads comprisethe most important of the several kinds of manufactures which have occurred asr6quiring, and, at the same time, as most proper for public encouragement; andsuch measures for affording it as have appeared best calculated to answer theend, have been suggested.

     The observations which have accompaniedthis delineation of objects, supersede the necessity of many supplementaryremarks. One or two, however, may not be altogether superfluous.

     Bounties are, in various instances,proposed, as one species of encouragement.

     It is a familiar objection to them, thatthey -,ire difficult to be managed, and liable to frauds. But neither thatdifficulty nor this danger seems sufficiently great to countervail theadvantages of which they are productive, when rightly applied. And it ispresumed to have been shown, that they are, in some cases particularly in theinfancy of new enterprises, indispensable.

     It will, however, be necessary to guard,with extraordinary  {281}circumspection, the manner of dispensing them. The requisite precautions havebeen thought of, but to enter into the detail, would swell this report, alreadyvoluminous, to a size too inconvenient.

     If the principle shall not be deemedinadmissible, the means of avoiding an abuse of it will not be likely topresent insurmountable obstacles. There are useful guides from practice inother quarters.

     It shall, therefore, only be remarkedhere, in relation to this point, that any bounty which may be applied to themanufacture of an article, cannot, with safety, extend beyond thosemanufactories at which the making of the article is a regular trade. It wouldbe impossible to annex adequate precautions to a benefit of that nature, if extendedto every private family in which the manufacture was incidentally carried on;and its being a merely incidental occupation, which engages a portion of timethat would otherwise be lost, it can be advantageously carried on without sospecial an aid.

     Thepossibility of a diminution of the revenue may also present itself as anobjection to the arrangements which have been submitted.

     But there is no truth which may be morefirmly relied upon, than that the interests of the revenue are promoted bywhatever promotes an increase of national industry and wealth.

     In proportion to the degree of these, isthe capacity of every country to contribute to the public treasury; and wherethe capacity to ply is increased, or even is not decreased, the onlyconsequence of measures which diminish any particular resource, is a change ofthe object. If, by encouraging the manufacture of an article at home, therevenue which has been wont to accrue from its importation should be lessened,an indemnification can easily be found, either out of the manufacture itself,or from some other object which may be deemed more convenient. I The measures,however, which have been submitted, taken aggregately, will, for a long time tocome, rather augment than decrease the public revenue.

     There is little room to hope, that theprogress of manufactures {282}  will so equally keeppace with the progress of population, as to prevent even a (1033)gradualaugmentation of the product of the duties on imported articles.

     As, nevertheless, an abolition in someinstances, and a reduction in others, of duties which have been pledged for thepublic debt, is proposed, it is essential that it should be accompanied with acompetent substitute. In order to this, it is requisite that all the additionalduties which shall be laid, be appropriated, in the first instance, to replaceall defalcations which may proceed from any such abolition or diminution. It isevident, at first glance, that they will not only be adequate to this, but willyield a considerable surplus. This surplus will serve --

     First. To constitute a fund for paying thebounties which shall have been decreed.

     Secondly. To constitute a fund for theoperations of a board to be established, for promoting arts, agriculture,manufactures, and commerce. Of this institution, different intimations havebeen given in the course of this report. An outline of a plan for it shall nowbe submitted.

     Let a certain annual sum be set apart, andplaced under the management of commissioners, not less than three, to consistof certain officers of the Government and their successors in office.

     Let these commissioners be empowered toapply the fund confided to them, to defray the expenses of the emigration ofartists, and manufacturers in particular branches of extraordinary importance;to induce the prosecution and introduction of useful discoveries, inventions,and improvements, by proportionate rewards, judiciously held out and applied;to encourage by premiums, both honorable and lucrative, the exertions ofindividuals and of classes, in relation to the several objects they are chargedwith promoting; and to afford such other aids to those objects as may begenerally designated by law.

     The commissioners to render to theLegislature an annual account of their transactions and disbursements; and allsuch sums as shall not have been applied to the purposes of their trust, at theend of every three years, to revert to the treasury.. It may, also, b cenjoined upon them not to draw out the money, but for the purpose of somespecific disbursement.   {283}

     It may, moreover, be of use to authorizethem to receive voluntary contributions, making it their duty to apply them tothe particular objects for which they may hive been made, if any shall havebeen designated by the donors.

     There is reason to believe that theprogress of particular manufactures has been much retarded by the want ofskilful workmen. And it often happens, that the capitals employed are not equalto the purposes of bringing from abroad workmen of' a superior kind. Here, incases worthy of it, the auxiliary agency of Government would, in allprobability, be useful. There are also valuable workmen in every branch, whoare prevented from emigrating, solely, by the want of means. Occasional aids tosuch persons, properly administered, might be a source of valuable acquisitionsto the country.

     The propriety of stimulating by rewardsthe invention and introduction of useful improvements, is admitted withoutdifficulty. But the success of attempts in this way, must evidently depend muchon the manner of conducting them. (1034) It is probable that the placingof the dispensation of those rewards under some proper discretionary direction,where they may be accompanied by collateral expedients, will serve to give themthe surest efficacy. It seems impracticable to apportion, by general rules,specific compensations for discoveries of unknown and disproportionate utility.

     The great use which may be made of a fundof this nature, to procure and import foreign improvements, is particularlyobvious. Among these, the article of machines would form a most important item.

     The operation and utility of premiums havebeen adverted to, together with the advantages which have resulted from theirdispensation, under the direction of certain public and private societies. Ofthis, some experience has been had, in the instance of the Pennsylvania Societyfor the promotion of manufactories and useful arts; but the funds of thatassociation have been too, contracted to produce more than a very small portionof the good to which the principles of it would have led. It may confidently beaffirmed, that there is scarcely any thing which has

{284}

     been devised, better calculated to excitea general spirit of improvement, than the institutions of this nature. The aretruly invaluable.

     In countries where there is great privatewealth, much may be effected by the voluntary contributions of patrioticindividuals; but in a community situated like that of the United States, thepublic purse must supply the deficiency of private resource. In what can it beso useful, as in prompting and improving the efforts of industry?

     All which is humbly submitted.

     ALEXANDER HAMILTON,

     Secretaryof the Treasury.

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